298 posts categorized "Guest Blogger" Feed

Passion for Performance: A CGMA’s Perspective

Lindsey Branston for AICPA_074Lindsey Branston, CPA, CGMA, is director of financial operations for the 70,000-member BMW Car Club of America and director of finance for the club’s charitable foundation in Greenville, S.C.

What’s your passion?

I’ve been fortunate to join an organization where my passion for strategy and financial analysis fit hand in glove with my love for cars and driving. As a CGMA, I know many financial strategies work on paper, but success depends on a deep understanding of how the club operates and of our members’ needs and desires. Our members are BMW enthusiasts—I’m one too. I go to car events all over the world to keep my finger on the pulse of BMW owner culture. Both my husband and I drive BMWs: an X5 SUV and a 435 convertible. Like many of our members, there’s a car I dream about owning. For me it’s an E9, a coupe built from 1968 to 1975.

How did you end up in a finance job for BMW?

When I was in public accounting, I worked with the BMW Car Club doing their audits. Then I started my own accounting firm and contracted with the club to provide financial management services. Since becoming a CGMA, I’ve expanded the work that I’ve done with the club and the foundation.

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The Current Expected Credit Loss Model is Here… Now What?

HamiltonYou know the feeling you get when you are excitedly looking forward to something? It just can’t come soon enough. For instance, you enter Broadway’s mega-popular Hamilton -- the musical lottery -- every morning and anxiously await the email saying that you won. Even if the chances are only 909 to 1. 

The financial institution community has been anticipating the release of the Financial Accounting Standards Board’s credit losses standard. We have been following the process since the beginning. We reviewed drafts and submitted comments along the way. We participated in focus groups and met with the FASB to discuss the community banks’ concerns. The final standard is here. Now what?

Last month, the FASB issued Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326). The release of this new standard marks the end of accounting for credit losses using an incurred model. Institutions should not only consider all factors that have been incurred as of the reporting date, but also should estimate losses over the life of the loan. If an institution cannot estimate credit losses to the end of the loan’s life, taking into consideration any anticipated prepayments, it must estimate as far as it can and then revert back to the mean for the remaining years. This process sounds simple enough to implement, right?

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Do You Remember a Mentor’s Best Advice?

MentoringHave you ever approached a crossroads in your career and weren’t sure which path to take next? Or maybe you were struggling—with no luck—to gain more confidence and visibility in your job. If you were fortunate enough to have a mentor at these critical junctures, there’s a good chance you gained valuable insights into the best solutions and smartest next steps. In fact, 75% of executives in a poll by the Association for Talent Development said that a mentor had been critical in helping them ascend to their current position.

Mentoring includes imparting wisdom that the mentor has gained through a lifetime of business and personal experience. We reached out to members on LinkedIn and asked them to share some of the best advice they’d received from mentors throughout their careers. Here’s what they had to say:

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Modernizing Fax Filings with the IRS


Shutterstock_156974060Federal and state agencies, including the court systems, are modernizing by allowing the electronic filing of petitions and other court documents. For example, Alabama, Texas, Illinois and Missouri have e-filing systems for court petitions. In 2014, two federal courts (2nd and 9th Circuit Courts of Appeals) piloted an e-filing program for all courts in which the user is authorized to file electronically. The program is expected to become national in the next few years.

The IRS is also modernizing, although not as fast as many practitioners (or the AICPA) would like. Calls to the IRS and cases can be routed to any IRS employee or office all over the country. We are seeing more appeals conferences conducted by telephone with the various service centers instead of in person and expect Skype-type conferences to become more common. For many years, the IRS has electronically processed bank account and wage levies on delinquent accounts. Now, the IRS is also able to issue electronic summonses to eBay and PayPal.

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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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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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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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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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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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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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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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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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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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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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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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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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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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How to Clean Your Data and Make it Look Slick


HouseEvery day we are inundated with articles, infographics and news reports that quote statistics that we are just supposed to accept at face value. Consider online real estate prices. If you search in your local area, you will find varying figures for median price, price per square foot and return on investment. The volume and variance in data leads to many questions: Who is supplying this information? What types of property does it include? What period does it cover?

As accountants, this unsubstantiated reporting should make us uncomfortable. We are a profession that prides ourselves on transparency and disclosure. When that isn’t forthcoming, our red flags should go up. How can we trust what we are reading when we know nothing about the source and quality of the underlying data? With all the advances in technology, accountants are uniquely positioned to be the champions who set higher standards for reporting. By giving the audience access to the data, we achieve the ultimate transparency. It’s not as hard or expensive as you may think.

I recently challenged myself to create a case study that analyzed real estate sales in my community—Panama City, Fla. Like many other resort areas, our beachfront county experienced wild fluctuations in property prices over the past decade. I was curious about property values, whether they were selling at a gain or loss and if the values used for tax purposes were fair.

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Elder Planning: Life’s Transitions After Retirement

Elder planningClients often fantasize about retirement; it becomes a sort of finish line for them. Get to retirement and you’ve made it. What they might not consider are the ways life may change once they’ve retired, and the financial, health care and other planning needs that go into preparing for the future.

Enter the knowledgeable CPA/PFS, who can go beyond retirement planning and assist with elder planning. There is a fine line between retirement planning and elder planning: While all financial planners help ensure their clients have enough savings to last until the end of their lives, elder planning also involves helping clients plan for life’s transitions after retirement.

You’re probably thinking, “Isn’t that the same as retirement planning?” Not really. Elder planning goes beyond financial independence and retirement to touch all areas of financial planning, including investment strategy, health care, estate planning, risk management (insurance) and end-of-life care.

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From the Frontlines: Kimberly Ellison-Taylor

Welcome to the AICPA’s series focused on bringing the perspectives of diverse CPAs to life.

Kimberly Ellison-TaylorAttitude. Aptitude. Appearance.

If I had to boil down the topics I focus on when I give advice to women in the workplace, the triple-A approach would be it.

Attitude, because people want to be around engaging, charismatic and nice people. Think about talent shows like “American Idol” or “The Voice.” Raw talent will get you far, but star power draws people in. The corporate world is the same. It is not enough to only be smart. Plenty of people who are smart have trouble growing their carreers and getting promoted. The difference maker? Confidence. Self-esteem. The ability to speak up and also work as part of a team.

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4 Cybersecurity Pitfalls to Avoid

HackerYou might break out in a cold sweat at just the thought of criminals on the other side of the world stealing your clients’ or customers’ account information. After all, if some of the largest corporations and agencies of the federal government can’t prevent their systems from being breached, what can a Main Street CPA firm or medium-sized business possibly do against such a threat?

Reality is that as a CPA you can probably do more than you think. At a minimum, as a trusted business adviser, you should help your clients or employer avoid these common pitfalls:

  1. Classifying cybersecurity as an IT issue. Although IT has a support role involving intrusion detection and prevention, cybersecurity involves much more than IT. Today’s hackers increasingly focus their attacks on human rather than technical vulnerabilities. Cybersecurity is an enterprise risk management (ERM) issue. With some specialized training, CPAs are uniquely qualified to systematically assess and report on cybersecurity risks and implement controls to mitigate those risks.

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The Insanity of Inheritance: How to Keep Your Clients Civil and Practical

InheritanceWhen you handle inheritance issues for bereaved clients, stop and put yourself in their shoes. Try to understand their emotions…loneliness, sadness, fear and possibly anger.

As a CPA financial planner, your role is to support your clients throughout their lives, including during the loss of a loved one. When it comes to inheritance, people’s judgment can become clouded. Even if dealing with an inheritance brings out the worst in your clients, you are helping them prepare for a secure retirement. Take a deep dive into their lives and look for an understanding of what they’re going through.

When clients lose a parent, they also lose their security blanket, leading them to cling to possessions that remind them of their loved one, such as a silver set, a gun collection or a folded veteran flag from military service. While these are all reminders of loved ones, lasting security really comes down to financial stability. Consider these three factors:

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Social Security File and Suspend: Important Deadline and Changes

DeadlineUp until now, if a married couple had one spouse at full retirement age (66 or older), file and suspend allowed the other spouse and/or a dependent to enjoy short-and long-term benefits.  But after April 29, 2016, this will no longer be the case. After this date, if a spouse suspends his or her benefits, benefits for everyone involved – including the other spouse or qualifying dependent – will be suspended, too. Thus, a filer must take benefits and abstain from delayed retirement credits for the other person to also receive benefits.

With the file and suspend strategy, a married person – typically the one who makes the most money – can file for his or her own Social Security benefits at age 66 or older, and then immediately suspend those benefits, while their spouse can still file for spousal benefits. As a result, the couple collects an ongoing Social Security check, and, at the same time, the spouse earning the most money sees his or her benefits grow by 8% each year, allowing for a potentially higher benefit for the surviving spouse.

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Why “Extension” is not a Four-Letter Word for Tax Season

Tax extensionsUp until January, I worked in public accounting and remember all too well the feeling when the calendar flipped to March; it seemed like all I was hearing from my individual clients was that they still had not received their 1099s from their brokerage accounts. It seems every year the compression of when these 1099s are received and the deadline to file gets closer and closer. Not to mention the frustration of getting those amended 1099s right after the client’s tax return has been assembled. Talk about adding fuel to the fire!

There are strategies and processes you can implement to encourage your clients to bring in all of their tax return data (with the exception of the late 1099s) so that you will have everything ready to go and can quickly finish the return once the 1099 arrives. However, despite these well intended strategies, the reality is that it feels nearly impossible to move all the returns that have complicated, late arriving 1099s through the entire process before April 18th (or April 19th in the case of residents of Maine or Massachusetts).

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Management Accounting for a Healthy Bottom Line

Natural Food is a Natural Fit for Shan Staka

Shan StakaShan was brought up with respect for healthy food and living that influences him in his role as CFO of Western Foods, a gluten-free facility in Woodland, Calif. The company makes flour from rice and ancient grains like millet, sorghum and amaranth.  In this AICPA Insights profile, we look at what prepared Shan to guide the operations of a growing natural foods enterprise.

Tell me about Western Foods and your role there.
The enterprise started five years ago and grew so fast that we were maximizing our capacity by year three. So we put forth additional resources and equipment to increase the production level, which has led to incredible growth. I am planning, forecasting and implementing financials to get the best use of those investments in Western Foods.

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Changes to Lease Accounting Have Been Announced. Are You Ready?


LeasesRegardless of the type of business that you are in, there is a good chance that you have been involved in a lease transaction. Whether you have rented space in an office building or leased vehicles or manufacturing equipment, you have most likely been exposed to lease accounting in one way or another.

While you may not have been required to recognize these leases on your company’s balance sheets in the past,  with the Financial Accounting Standards Board’s new leases standard, the accounting is about to change. In addition, you will want to pay close attention as the new standard applies to all type of entities— including public, private and not-for-profit organizations.

Under the new standard, lessees are required to recognize assets and liabilities arising from all leases, except for agreements that have a lease term of 12 months or less. Generally, lessor accounting will be similar to current GAAP; however, both lessor and lessee disclosures will change.

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5 Cybersecurity Precautions for Small CPA Firms

Cybersecurity small firmsWith busy season off to another running start, it’s important to remember that cyber attackers are busy too. With readily monetizable information on hand that can be sold easily on the black market, your practice is an especially attractive target for attackers.

Frequent news reports of breaches at large organizations and government entities might lead you to believe you don’t stand a chance if targeted. Fortunately, this is not the case. The following basic precautions can significantly reduce your risk and mitigate damage if you experience a cybersecurity incident.

  1. Locate, classify and separate information by risk level. The highest risk information for most firms is going to be financial account information such as bank routing and account numbers, credit and debit card numbers, and usernames and passwords for online account access. This information should be protected with a high level of security and stored separately from other client records. Because industry safeguards typically require names of authorized users, billing addresses, employer identification numbers and Social Security numbers to gain access to accounts, a system that stores information used to authenticate account numbers separately from the numbers themselves can mitigate losses should a security breach occur.

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From the Frontlines: Meet Kimberly Ellison-Taylor, CPA, CGMA

Welcome to the first post in a series focused on sharing the perspective of diverse CPAs

Kimberly Ellison-TaylorFull disclosure: All through my years in school, I was known as a teacher’s pet. Some kids may have been discouraged by this status, but it didn’t bother me. I had my heart set on a career—at the ripe old age of 8—and that was to become a CPA.

So I went out of my way to surround myself with educators — teachers, principals, librarians — that set high expectations for me and helped get me closer to that goal. Moreover, they returned the favor by setting high expectations for me. There was always a voice in my childhood saying, “This little girl has potential.”

Of course, having potential is just the beginning. Moving the needle to accomplishment takes hard work and the right people in your corner, a combination I’ve wholeheartedly embraced on my path to success.

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CPAs Well-Positioned to Help Manage Cybersecurity Risk

CybersecurityCybersecurity is becoming a critical issue as consumers increasingly entrust their most confidential information – including Social Security numbers, tax identification numbers and financial information – to companies that store this data electronically. As companies look for third-party assessment and verification of their cybersecurity risk management program, CPAs are well-positioned to provide these services – and the more comprehensive definition of attest that many states have adopted ensures that only CPAs can provide cybersecurity attest services in accordance with the AICPA’s high standards.

Attest services are those services that are limited to licensed CPAs and can only be performed by licensees through CPA firms. They include audits, reviews of financial statements and examinations of prospective financial information.

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Two Lies & One Truth about Personal Financial Planning

Personal Financial PlanningFriends and colleagues ask me all the time, “Why do you specialize in personal financial planning (PFP)?” That’s easy to answer, but let’s see if you can figure it out based on a game you’ve probably heard of: two truths and a lie, or in this case, two lies and one truth.

Lie #1: PFP is only about product sales and investments.

Clients are looking for more than tax advice and tax planning. Based on my experience of working with clients, as well as networking with leading CPAs who offer financial planning and those who hold the CPA-exclusive Personal Financial Specialist credential, what clients really want is integrated advice on all of their financial affairs. This includes tax, estate, retirement, investment and risk management/insurance planning.

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Estate Planning for the 99 Percent

Estate planningThe CPA financial planner has a new challenge: the majority of our clients’ estates will not be subject to the federal estate tax when death occurs. If this is true, then how do we help them plan for the future, as well as convince them that planning is still important and necessary?

I call this the “new reality” in financial and estate planning. In 2015, the applicable exclusion from the federal gift and estate tax was $5.43 million, indexed annually for inflation, and the 2015 applicable exclusion from the generation-skipping transfer tax (GST) was also $5.43 million. These numbers are now adjusted to $5.45 million for 2016. Clients whose estates fall below this threshold make up 99 percent of the clients we work with in our practices.

However, we can no longer say, “I will plan your estate and save you taxes.” With estate tax savings almost a non-issue, we must adjust, motivating the client to focus on non-transfer tax and income tax aspects of planning that have a large impact on their lives.

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4 Steps to Creating a Social Media Policy for Your Firm

Social media strategyOne way to deepen existing client relationships and connect with more prospects is to use social media. While LinkedIn, Twitter, Facebook and other applications will help your practice evolve, social media also presents several compelling challenges, especially when it comes to compliance.

If your firm is planning to use social media, you’ll want to create and maintain a social media policy. Keep in mind that this policy is not meant to restrict activity for tweeting and posting, but instead to establish parameters to meet these challenges and satisfy compliance requirements.

Four Steps to Your Policy

Your social media policy should outline what outcome you hope to achieve from social media and how you will achieve it. Here are four areas to consider:

  1. Vision. Your vision will detail how you and your team perceive social media, respond to engagement and think creatively for ongoing communications and initiatives. Consider it the extension of the culture of your business – the reason why you come to work and why clients stay with you.
  2. Planning. Having conceptualized and defined how you want to use social media, your plan should identify the platforms you will participate in, such as a blog, Twitter, LinkedIn, Facebook and others. During this stage, you should also determine who will manage these platforms. Will it be comprised of internal staff, external parties or both
  3. Purpose. Financial planners choose to use social media in different ways. How will you define your experience? Consider the following when determining how to engage:  
  • Do you want to use social media as a customer service channel?
  • Do you want to share educational tips, often delivered in client letters, conference calls and meetings, via social media?
  • Are you interested in leveraging the business development nature of social media? If so, you might focus on expanding your network of connections on LinkedIn.
  • Do you want to be known as a thought leader in your area of expertise? If so, developing credible content such as articles, videos and podcasts might be a good way to get your name out.

Certainly, it would sound natural to respond with, “I’d imagine we’d do all of those things at some point.” That is a safe assumption; however, in getting started, opting for a focused starting point helps you shape that voice and cultivate a rhythm to your use of social media.

  1. Goals. By the time you are ready to set goals, your social media vision has taken on a clear shape for you and your team. Like that financial plan, you can now start to envision mile markers and longer term goals you would like to achieve. Don’t neglect to consider how you could measure your progress of these goals, ensuring you factor analytics into your strategy.

Final Checklist

Social media policy is the ticket to entry to the use of social media. Start there and you will be more prepared to move ahead. In the meantime, here are a few areas to address:

  • When selecting a compliance solution for social media – think about ease of use. Choose a provider who can accommodate this with simplicity and meet your needs.
  • Recognize that content that gets shared widely and publicly may fall into the advertising and marketing materials classification. Understand who regulates you – FINRA, SEC, states – and know how advertising content is treated.
  • Keep in mind that testimonials are prohibited. We may not like it – and we know they are very valuable for word of mouth referrals, but when they are written, they are like ads. Just steer clear until the regulatory bodies change their minds.
  • If in doubt about what part of social media is static content (blog posts, articles, profile backgrounds and bios) versus interactive (tweets, status updates), have your content compliance-reviewed before you use it.

And, speaking of compliance, you’ll want to get some very clear direction from your compliance provider for social media. Some are stricter than others, so check to make sure you are following the rules. And, above all, have fun!

PFP members and PFS credential holders can listen to a podcast on this topic. 

Blane Warrene, MobileGuard. Recognized as an industry leader in financial services marketing, compliance and technology, Blane has worked in progressive roles for broker dealers, investment advisors and asset managers. 

Social media strategy image courtesy of Shutterstock

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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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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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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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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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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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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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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3 Initiatives to Improve Employee Engagement in Your Firm

Engaged employeeWhat if the concept of employee turnover was foreign to your firm? What if the Monday morning faces of each of your staff shone like those of children lined up for entrance to Disneyland? What if your firm had so many clients eager for your help that your biggest problem was managing new business?

The best firms have already figured out that motivated and passionate employees equals success. The real challenge lies in retaining those employees and keeping them engaged and inspired so they aren’t tempted to look for work elsewhere. Here are three initiatives to help your firm enhance employee engagement and inspire long-lasting dedication.

1.    Get Employees Involved

An engaged employee is one who has a strong connection with their firm. That connection can be developed when the firm’s vision, mission, and core values are created and lived out through the involvement of all employees – not just trickled down from higher-ups. To help increase employee involvement, establish an engagement system that will benefit everyone in the firm, such as:

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