137 posts categorized "Guest Blogger" Feed

Another Lesson on Unreasonably Low Compensation

Payroll-taxPayroll tax collection continues to vex the Internal Revenue Service despite several court cases that have resulted in rulings favorable for the IRS regarding unreasonably low compensation. A recent high profile case was David E. Watson, P.C. v. United States on which the Eighth Circuit ruled in 2012. Watson was an indirect partner in a CPA firm, practicing through an S corporation that paid him $24,000 of salary per year and between $175,000 and $203,000 in profit distributions. The court adjusted his compensation to $93,000.

It isn’t hard to see why shareholders of S corporations attempt to justify wage levels below what the IRS considers “reasonable compensation” (assuming the understated compensation is below the FICA wage base). Both the S corporation and employee save the 7.65% FICA and Medicare taxes on the wages not reported.

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Opportunities for Innovation: It's Time to Change the Way We Think

Auditors, and others in the accounting profession, think logically. We have to in order to do our jobs. However, as the world changes, so must we – and logic only gets you so far. Aside from logical thinking and reasoning, we also must be creative. It's that creativity, which can often be found in your existing staff, that can provide us with opportunities for innovation.

Take a look around and you'll see that the world is simply moving away from, and beyond, how CPAs have traditionally practiced. While CPAs still give an opinion on a set of historical financial statements, real-time technology is here to stay. People want information now, not later – and there's a big difference in providing one versus the other. That's where our profession, and the future of auditing, must change. It means taking a closer look at technology, standards – and people. I recently filmed a video for the AICPA addressing these issues

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3 Questions You Should Consider for Your Succession Plan

Succession-planThe AICPA’s Private Company Practice Section recently released results of its 2013 CPA Firm Top Issues Survey and succession planning is among the top 5 concerns for firms with 11 or more professionals. It’s no surprise to me. In fact, I’m elated firms have succession on their minds. My only surprise is that succession planning wasn’t cited as a top concern for all survey respondents.

Succession planning is an issue many CPAs have been avoiding for the last decade or so. Like many of our clients who may be uncomfortable discussing planning finances for a family that will continue to exist without them, we CPAs are in a tad bit of denial about our own mortality. We may not even realize the opportunity we have to establish a legacy and mentor others as we plan for the future of our firms.

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Cash and Investment Disclosures in Governmental Audits

City-hallAre you ready for your 2013 local government audits?  Cash and investments are a very important area of disclosure in the financial statements for state and local governments, especially for governments that report pension plans as fiduciary funds in their financial statements. Make sure you’re up to date on these cash and investment disclosure requirements. It’s a good idea that your clients are also well aware of these provisions as they prepare the disclosures, as they can help you to provide adequate audit evidence to support the material accuracies of the disclosures being made in the footnotes relative to cash and investments.

Here are a few important reminders about disclosures in this area: 

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In Times of Catastrophe and Routine: The Need for Forensic Accountants

Business-continuityIn the aftermath of May’s devastating tornado, the residents of Oklahoma are undoubtedly facing challenges to recovery on multiple fronts… physical, emotional, financial and beyond.

The first responders did their part to begin the recovery process as soon as the storms cleared. But in the weeks and months ahead, CPAs will be providing assistance in their own way, by expertly answering questions and providing essential guidance in the recovery process.

Simply put, we can play a part in reestablishing people’s livelihoods and restoring communities that have suffered great loss.

For example, local business owners dealing with business interruption losses may need answers regarding the optimal time to contact their insurers, how to document the claims or something as fundamental as what their policy will and will not cover.

 

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Placing the Public’s Interest at the Forefront

HandshakeThe CPA profession has a long-standing history of serving the public interest, with more than 125 years of providing services in the highest professional manner. As individual clients’ financial worlds become increasingly complex, many CPAs have responded by expanding their service offerings beyond traditional tax compliance and planning to include investment, estate, retirement and risk management advice.

The landmark Dodd-Frank Wall Street Reform and Consumer Protection Act, passed in the wake of the economic crisis of 2008, required that the Securities and Exchange Commission conduct a study on the effectiveness of the existing standards of care for financial professionals. The study covers CPAs who provide investment advice and personal financial planning services to their individual clients (download the free CPA’s Guide to Investment Advisory Business Models to determine if you have a registration requirement). Currently, broker-dealers and investment advisers operate under different standards of care.

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Will The Research Tax Credit Be Extended Permanently?

Stop-go-switchThe research tax credit has been around since 1981.  The credit is generally available if you incur research and development expenditures for qualified research that are technology based and intended for the development of new or improved processes, products, techniques, or formulas (among other requirements).

Do you know how many times the credit has expired and been extended since it was enacted back in 1981? The answer is at least eight expirations and 15 extensions.  The credit expired as recently as the end of 2012 but was extended through 2013 with the American Taxpayer Relief Act of 2012.  If you answered that question correctly, I applaud you for keeping up with the changes.  I don’t know about you, but I am getting tired of looking up to see when the credit will be expired.

If you are tired of never-ending expirations and extensions, I have some good news to report. 

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Paving the Way to Career Happiness and Success

Painting-roadwayFor many years, I had what I now call an "accidental career."  I didn't put much thought into why I was moving up the ladder, I just climbed because that's what I was supposed to do.  It’s no surprise that I soon found myself unchallenged and feeling like I wasn't making a difference.

When I stopped to evaluate, I realized that the power was mine to make a change. It was time to find out what would happen if I put my whole heart and soul into something. So I quit my job and started a business. I spent my life savings trying to figure it out. Ultimately I learned more about business, life and myself than I ever could have on the safe road.

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Health Care Considerations for Employee Benefit Plans

Health-careThe debate continues about how the Patient Protection and Affordable Care Act will impact health care costs in the overall economy. While CFOs may not be interested in the macroeconomics of it all, they will want to keep their own company’s health insurance costs down. It will not be easy. 

Signed into law in 2010 and upheld by the Supreme Court in 2012, the Patient Protection and Affordable Care Act will profoundly affect individuals, employers, health care providers and insurance companies.  In addition to the many new tax rules to offset the cost of these reforms, the law also contains many changes that employers are going to need to consider and how it may affect employee benefit plan operations, internal controls, financial reporting and more.

Here are a few things that may have a larger impact on plans:

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3 Ways the New COSO Framework May Affect Your Business

Over the past 20 years, change seems to come at the speed of light and has had a significant impact on the way businesses operate. Markets have become global, just about every process can now be outsourced and technology has become integrated into the DNA of every business. If anything, changes in rules, regulations and standards have accelerated. Businesses must now satisfy the high expectations of regulators and other stakeholders regarding governance oversight, risk management and the detection and prevention of fraud. All of this change means that stronger internal control practices must be developed to help to grow, as well as protect, the organization.

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Time is Running Out: Verify Your Clients’ FBAR Obligations Now

HourglassJune 30 will be here very soon – making sure your clients are compliant with the requirement to file a Report of Foreign Bank and Financial Accounts by that date is critical as civil penalties for failure to file are huge – they range from $10,000 up to $100,000 or 50% of the total foreign account balance. Criminal penalties include $250,000 or five years of imprisonment or both.   

If your client is a U.S. resident and has a total of $10,000 or more in all foreign bank accounts combined or has signature authority over a foreign account, he or she must file FBAR Form TD F 90-22.1 annually.  The FBAR is a report and is not to be filed with the income tax return.  What makes the FBAR different from many other forms is that it must be received, not postmarked, by June 30 and it is filed with the U.S. Department of Treasury, not the IRS.  Also, there are no extensions. 

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Sustainability Reporting: Don’t Miss this Opportunity

Business-inventoryWhether boosting the bottom line, preserving the planet or a combination of the two, sustainability has officially crossed the threshold of America’s businesses, with many of the greatest skeptics even now realizing that it’s here to stay. In fact, according to the Governance & Accountability Institute’s report: 2012 Corporate Environmental, Social and Governance / Sustainability / Responsibility Reporting – Does It Matter? Analysis of S&P 500 Companies’ ESG Reporting Trends and Capital Markets Response, “53 percent of S&P 500 Index companies are currently disclosing ESG information, compared to about 19-20 percent of the S&P 500 reporting in 2010.”

Sustainability’s momentum is being fueled by a large, influential and growing majority of supporters: business leaders. They recognize that sustainability-minded organizations are more committed to management checks and balances, informed decision-making and community goodwill. What follows is an organization’s reputation for greater stability, less risk and a more secure market value. Sustainability-minded organizations are among the top choices when retailers and other businesses create vendor relationships, select investment candidates and make purchase decisions.

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Small Businesses and Health Care Reform – What Now?

Health-care-reformThe Patient Protection and Affordable Care Act (health care reform) seeks to change the way health insurance premiums are established, just as the Act Providing Access to Affordable, Quality, Accountable Health Care did in Massachusetts. As CPAs’ small business clients begin to implement the requirements of health care reform, CPAs need to understand two significant ways in which their small business clients, and their own small practices, may be affected.

The Small Group Insurance Market and Increasing Premiums

The first big change that health care reform brings is the prospect of “merging” (formally or via rating rules) the small group insurance market with the individual insurance market. The individual market typically has the highest costs of all the health insurance markets due to the actuarial risk of a single covered life and the time and expense of selling single policies. The small group market, historically 50 employees or less, but in the case of health care reform, 100 employees or less (mandated to expand the risk pool base of small businesses who might also absorb the cost of the merged individual market), is significantly less risky and thus has lower premiums. As has been the case in Massachusetts, if the formal merger of the two markets’ risk pools takes place in your state, it may cause small business premiums to increase dramatically. If you or your client presently have more than 50 employees and are covered in your state’s existing large group market risk pool, premiums could rise once the small group level increase to 100 employees becomes effective in 2014.

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Celebrate Memorial Day: Serve a Veteran

Memorial-dayNow that you’re back to work after this year’s Memorial Day celebrations, you and your colleagues may be looking for additional ways to say thanks to the men and women who protect the U.S. and its interests. Good news! There is an exciting opportunity for CPAs to use your talents to do just that.

It is all part of the Veteran Fast Launch Initiative, a combined effort of the AICPA and SCORE. The program connects veterans who want to start and grow their own businesses with CPAs from across the country. The aim is to help veterans, their spouses and families succeed as small business owners. Practitioner volunteers provide up to five hours of time at no charge to veterans.

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10 Skills for Mapping Your Journey to Partnership

Partner-handshakeDo you have firm partnership in your sights? If so, good for you! Although there is no “one size fits all” approach for a senior manager to become partner, there are steps CPAs can take to strengthen their skills, expand their knowledge and develop personal characteristics that can bring them closer to achieving their goal. Beyond working hard to stand out, here are some things we did that helped us better position ourselves to become partners at our firm, Lattimore Black Morgan & Cain, PC. You may want to consider these tips as you set out on the road to partnership.

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A Smooth Transition to the Cloud

Digital-cpaA small business gains access to sophisticated technology it could not previously afford. A mid-size company reassigns its IT staff to strategic projects that encompass far more than day-to-day tech operations. A large organization is able to tap into enhanced business intelligence and put it to work more quickly. 

These are some of the success stories associated with cloud computing. Cloud technology is quickly becoming an integral part of everyday business life, smoothing the way to valuable business process outsourcing opportunities and making it easier to identify and use critical business intelligence. In fact, over 65% of IT security professionals reported using some type of cloud technology for mission-critical applications and data, according to the AccelOpps Cloud Security Survey 2013. And CPAs are integrally involved in many organizations’ shift to the cloud.

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How Unlimited Vacation Works in My CPA Firm

Exotic_vacationBefore starting my own CPA firm, I worked at a large, national accounting firm and found I was never actually able to use up my three weeks of annual vacation time. However, when I went to work for a local boutique CPA firm, I only got ten annual vacation days. There was also no policy for telecommuting and no flexible schedules or incentives for being more efficient than expected, such as being rewarded with more paid time off. “Face time” in the office ruled. Initially, I was okay with limited vacation, but a couple of years in, I realized that I would really value more flexibility as part of my compensation package.

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Virtual Work Teams Are Coming

Virtual-teamAs the economy continues to recover, the impending retirement of our nation’s Baby Boomers will create a labor shortage far greater than any we have experienced in the U.S. Professionals with the right skills will have their choice of employment opportunities, which will drive demand – and salaries – up. CPA firms that provide truly motivational and engaging environments will win the recruiting and retention race.

That’s why learning to manage the challenges and possibilities of virtual work teams is a must for today’s current and emerging partners. The need for increased workplace flexibility generates passionate conversations by CPA firm leaders and team members. Employees are challenged to keep a steady balance between their work and their personal lives as demands in each continuously change. Some aren’t willing to make the firm their top priority.

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5 Things CPAs Need to Know about Integrated Reporting

Integrated-reporting-word-cloudLast week, my blog post discussed that Integrated Reporting <IR> represents an important shift in corporate reporting in which CPAs can play a key role providing consulting services, implementation or report preparation. In today’s blog, I’m drilling down into some of the key concepts of the recently released Consultation Draft of the International <IR> Framework that are important for CPAs to understand.

Five features of the Draft Framework are:

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Evolution of Corporate Reporting: Integrated Reporting

Integrated-reporting-word-cloudCorporate reporting in the U.S. and around the world has often developed as disparate strands of reporting.  Stakeholders have grown to seek more and more information in a number of different reporting vehicles, but do they really seek the details or are they trying to drive better corporate practice?

Integrated Reporting <IR> represents an evolution of corporate reporting that focuses attention on how an organization creates value in the short, medium and long term.  An integrated report, a key output of Integrated Reporting, is a concise report primarily intended for investors of financial capital, although other stakeholders who have an interest in the organization’s ability to create value will also benefit from such communications. 

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How Would an Unlimited Vacation Policy Work in Your CPA Firm?

Tropical-island-getaway-vacation

After this crazy, compressed tax season, you and your employees are certainly ready and deserve a vacation. But do you give your employees enough vacation time? How much paid vacation time is enough? Can you imagine that the answer might someday be “as much as they want?” Some companies are shifting toward an unlimited vacation policy because they believe it can enhance morale and minimize stress. Although only 1% of organizations offer unlimited paid time off, according to a Society for Human Resource Management survey, it is surprisingly most often used at smaller organizations. There are a number of advantages to offering unlimited vacation time in your CPA firm. They include:

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Why I’m a Financial Literacy Volunteer

VolunteerTeaching financial literacy continues to be one of the most gratifying activities of my career.  Although it requires a portion of my already limited time, the rewards (tangible and intangible) are tremendous. Following are the reasons I think public service via financial education is important to us as individual CPAs as well as to our profession.

The Need is Great

Financial education is not taught in our public schools and our economic/financial environment continues to become increasingly complex. Many people do not have the basic information they need to make financial decisions and they don’t know whom to trust. There are large segments of our population who need the professional, objective advice that CPAs can give, but who cannot afford the fees: teenagers and college students, the elderly and middle/low income adults, to name a few.  

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8 Tax Reform Questions Congress Needs to Raise (and Answer)

Number-8It looks like comprehensive tax reform is gaining some sense of realism. Consider these important actions so far this year:

  • President Obama mentioned it in his January 2013 State of the Union address: "Now is our best chance for bipartisan, comprehensive tax reform that encourages job creation and helps bring down the deficit.  We can get this done."
  • The House Ways and Means Committee formed 11 working groups to address specific areas for reform.
  • On March 21, the Senate Finance Committee began issuing Tax Reform Option Papers -the first one covers simplification for families and businesses.
  • Tax reform is mentioned in both the House and Senate FY2014 Budget Resolutions produced by the budget committees.

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6 Things Not-For-Profits Need to Know about Non-Cash Contributions

Not-for-profits continue to encounter unique measurement challenges for gifts in kind. There are a variety of approaches available for not-for-profits to value GIK, which can result in large disparities between handlings by different not-for-profits and questions about the application of generally accepted accounting practices to GIK. Other issues such as identifying the applicable principle markets and the effect of nominal fees on GIK require not-for-profits to scrutinize their GIK practices to ensure GAAP is being properly applied.

Not-for-profits must measure all non-cash contributions such as items auctioned off for charity; excess or obsolete goods given to charity to help fulfill its mission; free print or web advertising space and even radio advertisement air time. However, measuring these intangible items can be challenging, as not-for-profits who receive such gifts would not otherwise purchase or sell them and not-for-profit administrators simply may not know the fair market value of these gifts or have access to valuation information.

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The Cloud: Just One SOC Opportunity

Service-organization-control-markIt's no secret that an organization's confidential information is vulnerable in today's world of electronic storage. If you have any doubt, just ask The New York Times or The Wall Street Journal – both of which recently reported having their computer systems hacked.

Organizations transferring storage and/or the processing of their data to cloud-based systems are faced with the added complexities of how to best maintain ownership and control data while continuing to assure customers they have controls in place to keep data secure. How can organizations provide their stakeholders with comfort related to this transferred information?

Service Organization Control ReportsSM represent the intersection of cloud computing and the trusted advisor role of the CPA. In 2011, the AICPA introduced three SOC reporting options: SOC 1SM, SOC 2SM and SOC 3SM reports, creating a great opportunity for CPAs to assert their knowledge and capabilities related to examining and reporting on controls at service organizations, including cloud service providers.

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Using Technology to Automate Finance and Help You Make Better Business Decisions

Business process outsourcing
Everyone is being asked to do more with less in the current economy; CFOs are no different. Many are looking for ways to enhance and streamline the finance function, from transaction processing to budgeting and reporting. Automation through leveraging state of the art technology is a key component to assist in this endeavor. With advancements in business applications and cloud-based technology like Intacct, Bill.com and others, virtual work environments, mobility and instant data is the new norm.

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9 Tips for Invigorating Weary Brains, Bodies and Balance Sheets

BreakfastWhew! After months of long hours, you and your colleagues are likely finishing up the first filing deadlines of the year. Nice going!

Even with April 15 clearly in sight, there’s still work to be done by many practitioners. Clients are counting on your smarts like never before to help them make sense of their financial situation in this new environment and find ways to improve it. Let’s face it, you are running on fumes, yet you are far from the finish line and a well-earned break.

The big question you may be asking now is, “How can I get an energy boost so I’ll have the stamina to deliver on the promises I have made to my clients?”   

It’s no secret that when human engines are operating at full throttle they need more than adrenaline to perform their best. Sure, we know that we should eat right, exercise and be good to our bodies and minds if we want to sustain our ability to work at a record pace. The trick is finding the proper balance to yield the needed strength when our days are jam packed with meetings and client commitments.

Here are nine best practices to reinvigorate you so you can be your best. Even better, they are not complicated, expensive or unfamiliar. 

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Innovation through Sustainability: It’s as Simple as Soda Pop

Sustainable-innovationCall it what you will: pop, soda, Coke, Pepsi, Cheerwine, bubbly juice… countless Americans have an insatiable thirst for carbonated drinks, but we all know the costs of consuming a lot of soda over time can add up and it’s often bad for us. Plus, the discarded cans and bottles take a heavy toll on the environment, piling up in landfills across the world.

Enter SodaStream, an appliance you can use to make carbonated drinks straight from the faucet. SodaStream International Ltd., the product’s manufacturer, has a completely sustainable business model featuring reusable bottles that can last one year or more, rechargeable CO2 canisters and any number of flavored syrups to liven up your drink. The result: landfills are spared more than 1,000 plastic bottles per consumer every year, customers reuse system components, and this savvy company gains major profits and a well-earned reputation for being innovative and environmentally conscious. Over the past few years the company has also achieved remarkable growth, increasing revenue by 51% and net income by nearly 60% from 2011 to 2012. What CFO wouldn’t be impressed with that?

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Is Hiring a CPA Worth it? 5 Tips for Getting Your Money’s Worth

Tax-accountantOften when people find out I’m a tax accountant, I get asked, “How much does a CPA cost?”  It’s like me asking “How much does a home cost?” We all understand that a 1,000 square-foot home in Kansas has a different cost than a 1,000 square-foot penthouse condo in New York City.  The same concept applies to CPAs.  

The answer to both questions is the same:  it depends.  For example, my uncle has a simple tax return and pays $250 in preparation fees.  On the other hand, I had a client whose return took over a week to prepare when I worked in a large firm, which cost the client around $100,000. 

A good CPA may cost you more upfront but will pay off in the long run because he or she is thorough.  Anyone can drop numbers in software.  However, a CPA will analyze the situation to look for tax savings opportunities and help you plan for next year – in short, they become your trusted advisor.  I once had a client whose former preparer had cost her an additional $4 million in taxes because he didn’t consider accelerating her fourth quarter estimated tax payment to December from January.  

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With So Much Information, Who’s to Say What’s Accurate?

"We are drowning in information, while starving for wisdom. The world henceforth will be run by synthesizers, people able to put together the right information at the right time, think critically about it, and make important choices wisely."
--E. O. Wilson, American Scientist

Information integrityOn my smartphone I have four different weather apps. Isn’t it amazing we live in a world where we can find out the weather in seconds on demand? Of course, there’s a price to pay for having so much information available at our fingertips. On any given day, I could consult each app and they each might tell me a different forecast for the day or week. That’s not a huge issue if the difference is a matter of about four degrees in the summertime. I’m not sure I can tell the difference between 74 and 78 degrees, anyway. But what about winter? I may not be able to feel the difference between 31 and 35 degrees, but my steep driveway can definitely convey the difference to me quite well as I spin my wheels on black ice on my way to work in the morning.

That’s why it’s vital that you feel confident about the information you use day-to-day—at home and in business.

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How Peer Review Strengthened Our Firm

Peer reviewOur firm, Gentile Pismeny & Brengel, LLP, headquartered in Great Neck, N.Y., has undergone eight peer reviews since 1991. These reviews have consistently proven to be highly beneficial, providing us with new insights into how we can strengthen our firm, and in turn, the profession. In fact, we see such value in the process that we’ve recently decided to expand our array of services to include peer review.

Wondering what peer review can do for your firm?  Read on to discover why we feel so strongly about it.

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Host a “Welcome to Tax Season” Celebration

"The Bruce Dickinson" (Christopher W..."The Bruce Dickinson" (Christopher Walken) delivering the iconic phrase "...more cowbell!" (Photo credit: Wikipedia)

As we enter one of the most anticipated times of the year, why not host a celebration to mark its arrival? You know, show the business community that you are excited about this special season.

“Are you C-R-A-Z-Y?” you might be asking. It’s tax time. Parties are just not what we do right now.

This year, maybe it’s time for a change. Do something different. Welcome the arrival of tax season with clients and friends of the firm. After all, it’s your time to shine. Embrace your place in the spotlight.  

Take a tip from movie producers and best-selling authors who hold premiere parties when they release new films and books. Believe it or not, there are a number of strategies that you can adapt from their attention grabbing events. Even though your firm isn’t likely to have such an extravagant budget, you can achieve the same results with a simple gathering. It’s all about getting your audience excited! Not to mention spreading the word about your firm with viral conversation starters such as “Guess where I’m going tonight?” or “You will never believe who threw such a great party last evening.”

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New Reporting Framework Will Eliminate “Noise” for Bankers, Other Financial Statement Users

No-noiseIn my almost 20 years in the banking industry, I’ve come across dozens of owners and managers of small private companies who cringe when it comes time to prepare financial statements. That’s because for many of them, the process is complicated, time consuming and costly. Moreover, a number of rules they are required to follow do not deliver financial information relevant to their businesses. These small- and medium-sized entities have been in need of a financial reporting option that is tailored to their circumstances and produces financial statements and information that their bankers can use and rely upon. Now, finally, that financial reporting framework is being made a reality.

One of my most rewarding professional experiences has been serving on the task force that is developing the new Financial Reporting Framework for Small- and Medium-Sized Entities. What’s a SME? No standard definition exists, but the acronym is self explanatory – small and medium size entities, which happen to make up about 20 million for-profit companies in the United States.

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Use Social Media, Don’t Let It Use You

Social-mediaThe AICPA’s Forensic and Valuation Service Conference, held Nov. 11 through 13, involved several sessions that were taught the “un-conference way.” These sessions were unconventional in their approach and involved peer-to-peer interactive learning. One un-conference session I attended was Tom Hood’s “Getting an ROI from Social Media via ROA (Return on Attention).” Tom is the CEO of the Maryland Association of CPAs and is considered a top thought leader in accounting.

From the moment we entered the room, we were thrown headfirst into the world of social media, as Tom encouraged us to sign into the gosoapbox event. Tom kicked off the session with a survey of attendees’ social media habits. In our group, 11% did not use social media at all and 71% viewed social media as a time sink, a valid concern for professionals who already have very demanding schedules. 

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Tax Season: Our Time to Shine

Tax-seasonIt’s almost tax season once again. Can you think of a better way to kick off 2013 than adopting a fresh approach to this ever important time of year?

Here’s a thought: What if we all agree to tell a new story this tax season? Instead of framing it as a time to work your fingers to the bone, embrace the notion that tax season is your time to shine. Don’t you owe it to yourself, your colleagues and your clients to let the world know that you love tax time? After all, it’s what you have studied for and worked toward throughout your career. Even better, it’s the time when the world looks to the CPA profession for its tax smarts and number savvy, problem solving know-how.

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The Defining Dozen: 12 Metrics CPA Firms Should Track

Business-metricsThis time of year, CPA firms are thinking and planning ahead for their busiest season. That makes now a good time to consider whether your CPA firm will be operating at peak efficiency. Is your CPA firm making the most of current relationships and doing all it can to expand into new ones? While there are many metrics CPA firms use to evaluate quantitative performance, here are 12 metrics than can provide more qualitative feedback. These metrics can help CPA firms measure their reach with clients and provide insight into how well processes already in place are helping to identify opportunities with clients.

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Benevolence Is Back

Hands-inBenevolence is a word my grandmother would have used.  But I’m bringing benevolence back. Two years ago, I joined an incredible group of trustees on the AICPA’s Benevolent Fund. This experience has changed me. The Fund’s mission is to help our members. The trustees’ immediate goal is to raise awareness that the Fund exists so members know where to turn when unplanned financial emergencies occur.

The Benevolent Fund is a tangible expression of compassion. It’s a refreshing departure from the normal gruff and impersonal business world. The Fund has been quietly sprinkling generosity and kindness via financial assistance to needy AICPA members for nearly 80 years. Eighty years of benevolence. 

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Becoming a Better Expert Witness

Expert witnessEarlier this year, the AICPA Forensic and Valuation Services Conference was held in Orlando. In the past, forensic services and valuation services held separate conferences; this year, in recognition of the fact that many CPAs perform a combination of these services, the two events were joined. As many as eight concurrent sessions were available to attendees on topics including basic, advanced and practical forensic and valuation issues; practice management and marketing; and litigation issues. 

As a CPA who performs primarily valuation services for litigation, two issues of particular interest for me were expert testimony and the cost of capital in business valuations. Ron Seigneur moderated a panel of three attorneys in a session titled “What Do Lawyers Really Say About FVS Experts?” This session was a great look into what attorneys are looking for in an expert and how expert testimony can be most effective. 

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Fair Value: A Hot Topic at the FVS Conference

Fair-valueA recent report published in August 2012 by the Public Company Accounting Oversight Board outlines certain deficiencies in audit procedures with respect to a clients’ fair value determinations. The report explains these deficiencies, which included, among others, fair value determinations of investment securities and business combinations. With the increased scrutiny on fair value measurements and the increase in business combinations during 2012, how will audit firms and valuation professionals educate themselves to improve the quality of their work?

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What’s in a Name?

IT Section Renamed to Information Management and Technology Assurance

Names have power. Corporations invest millions of dollars and countless hours of focus group sessions before a major name change. Names provide insight into an entity or company’s background and mission. They also help us infer certain characteristics about an organization or set expectations for how it delivers a particular product, service, or experience.

Consider these famous name changes for a moment. Would Google be as ubiquitous if it had kept BackRub as its name? Would the cola wars rage on if Coke were competing against Brad’s Drink or against its newer moniker, Pepsi? Innovation, mergers or a decision to move in a different direction can lead companies, organizations and other entities to outgrow their names.

Quite simply, a name change allows organizations to better reflect their purpose and what they offer. For this reason, the AICPA renamed the Information Technology Section to the Information Management and Technology Assurance Section.

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Merchant Card Reporting Compliance Raises Its Head Again

Credit card terminalCPAs are well aware of how Form 1099 reporting improves tax return compliance. CPAs are also aware of how the 1099 rules can lead to considerable taxpayer frustration or opposition. For example, during the 2012 filing season, we heard a lot about the difficulties taxpayers had trying to comply with the new cost basis information reporting rules for brokers reporting stock sales; and this particular issue remains a concern of ours. Another major initiative, which until recently seemed like a sleeper issue, is now ripe for taxpayer focus. Merchant card companies are required to report (on Form 1099-K) the gross receipts that a business receives from customers paying with merchant cards during the year. Merchant cards typically include both credit cards and debit cards.

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3 Ways to Improve Your CPA Firm’s Website

Website marketingCPAs excel at providing exceptional service once our clients are in the door – but actually getting them in the door is another story.

With the advent of social media and the ever-important search engine rankings, CPAs may find the world of marketing more challenging.

Your company website is your #1 marketing tool.

Think about it – when you need something, what do you do?

You Google it (or at least most people do).

If you click on a website in the search listings and you don’t like what you see or are confused – you bounce. You leave the site, which is what many of your potential customers are doing if your site isn’t up to par.

Let’s say that a potential client lands on your website.

What do they see? Do they know what to “do” once they land?

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Microsoft’s Windows 8 Experiment Will Affect All CPAs

Windows 8 PresentationWindows 8 Presentation (Photo credit: Michael Kappel)

Remember when Microsoft was the 800-pound gorilla, the dominant software maker, the most valuable company in the world? That was about the time when Microsoft invested $150 million to save rival Apple from bankruptcy.

Fast-forward 15 years, and Apple has risen from the ashes to become the hottest company on Earth—a corporate behemoth that, for a time earlier this year, boasted the highest market capitalization in history, a claim Microsoft once could make.

Microsoft, meanwhile, has slipped from its perch on top of the corporate world and while it is still a business giant nowhere near a bankruptcy filing, the business shift from desktops and laptops to mobile devices and the cloud has put Microsoft in the unfamiliar position of playing from behind.

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Using KPIs to Become a Trusted NPO Business Advisor

Key performance indicatorKey Performance Indicators, while frequently discussed in the for-profit sector, can be an essential aspect of a non-profit organization’s financial health and performance. KPIs are quantifiable measurements of an organization’s health or success. Determining what KPIs are important for a particular organization can be difficult, especially if that organization isn’t a franchise in a larger collection of organizations. As a CPA, you can identify KPIs for your NPO clients, explaining how they can use these indicators to their advantage. When understood, KPIs can allow NPOs to benchmark their progress against peer organizations for context about healthy and not healthy positions to be in.

Important principles to remember when helping your nonprofit clients select and identify KPIs:

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What Is the AICPA’s Health Care Expert Panel and What Do They Do?

Health care expert panelUp until about a year ago, I had only heard that the AICPA has expert panels  but I didn’t really have any idea about what they are or what they do. I was asked to staff the Health Care Expert Panel  and I can tell you last year has been quite a ride!

Who Is the Health Care Expert Panel and What Is Its Mission?

The Panel consists of 13 members who represent a mixture of firm practitioners as well as preparers and users who work in the industry. They all have one thing in common—they are considered to be some of the health care industry’s “cream of the crop” and best equipped to carry out the panel’s mission to protect the public interest and address the needs of AICPA members in the areas of financial reporting (including business reporting), audit and attest services, and regulatory matters from the health care industry perspective.

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Selling a Business or Advising a Seller? Tips to Navigate the Fiscal Cliff

Fiscal cliffWith about 10 weeks left in the calendar year, it would be difficult for even the most motivated business owners to complete their company’s sale by Dec. 31, unless they’re already in process.

Some owners are hustling to get that process done to avoid falling over the tax cliff set to take effect Jan. 1. But the principles of selling a business apply no matter what the calendar says, according to Scott Miller, CPA/ABV, an expert presenter for the Oct. 30 Journal of Accountancy webcast, Inside Buyout Basics and the Tax Cliff: A Timely Combination.

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What is a ‘Digital CPA’?

Digital CPA

There’s no question technology is having a huge impact on how CPAs and their clients conduct business, but the adoption rate isn’t uniform within the profession. Some practitioners are taking a wait-and-see approach. Others are sticking their toes in the water. And still another group is fully embracing technology and all that it promises—integrating innovation throughout their firm’s processes and workflows and becoming digitally present in today’s online world.

At CPA2Biz, we use the term ‘Digital CPA’ to describe the latter category. The Digital CPA harnesses the power of the cloud, the broad use of mobile devices and a carefully calibrated online presence to attract clients and build new service lines. It’s inevitable the entire profession will arrive at this same place one day – and that day isn’t far off.

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5 Improvements to Civil Litigation Procedure for Financial Expert Witnesses

Reducing client costs in civil litigationHow can civil litigation become less costly and complicated and more fair for all involved? Although rules of civil procedure call for a quick, inexpensive and fair determination of all civil actions, those goals often are not met. The AICPA Forensic and Valuation Services Executive Committee and the members of the FVS membership section are well aware of the many problems within the system that can cause lengthy delays and unnecessary expenses. Because CPAs have a unique perspective on the issues involved, the FVS Executive Committee, in conjunction with the Institute for the Advancement of the American Legal System at the University of Denver, surveyed FVS Section members, many of whom are frequently retained as expert consultants or testifying witnesses in civil litigation. Based on the survey findings, the executive committee has released a new report, “Another Voice: Financial Experts on Reducing Client Costs in Civil Litigation.”

The report offers stakeholders in the civil justice system--including judges, attorneys, financial experts and clients--five recommendations to enhance the effectiveness of financial experts and efficiency of their use in the civil pretrial process:

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What Can CPAs do about Tax Identity Theft?

identity theftI am constantly getting emails and calls from members who have stories about how one of their clients has become a victim of tax identity theft and the person’s refund has been put “on hold” until the government can sort things out. Some of these stories can be heart wrenching. 

It’s no surprise that these stories are on the rise. Tax identity theft has mushroomed – the IRS identified 1.2 million incidents in 2011, over double the amount from 2010 (440,581) and the numbers may actually be much higher according to a Treasury Inspector General analysis. So, unfortunately, the odds that your clients may be affected have gone up considerably.

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Expanding Your CPA Services to the Government

Federal-spending-on-financial-services-FY-2011In today’s economic climate, even with budget cuts on the horizon, the U.S. government is the largest consumer in the world. Yet, for many businesses -- small businesses in particular -- the thought of doing business with the federal government can be headache-inducing. Last year, the federal government spent more than $850 million on financial services. Just more than half of this was spent with CPAs; the remaining half was spent on other financial services, including debt collection.

The demand is there, but is it possible for a small CPA firm to capture a portion of this market? While well-established Fortune 500 firms have a definitive advantage in the contracting industry, the federal government has taken steps to level the playing field and create a more small-business-friendly environment. Two examples of this are small business goaling and set-aside contracts. 

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