In the News: CPAs Provide Gift Tax Guidance and Cyber-Security Tips

Shutterstock_124401508CPAs serve as trusted advisers and provide their clients with expert guidance on a variety of topics. It’s no surprise that they are frequently cited by the media for their expertise in areas such as tax, financial planning and even cyber security best practices. I’ve summarized a few recent examples of CPAs helping people make informed decisions about their financial lives.

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Responding to Change: Update on the Next Generation CPA Exam

Cpa examThe AICPA is committed to ongoing evaluation and improvement of the CPA Examination. Thoughtful enhancements help maintain the relevance of the exam for the current practice realities for newly licensed CPAs. Last year, the AICPA launched a practice analysis, a comprehensive research project to inform the development of the next version of the CPA Exam. 

An important part of the practice analysis was an Invitation to Comment called Maintaining the Relevance of the Uniform CPA Examination. The ITC was designed to address the changing landscape of the CPA profession and asked a wide range of stakeholders to weigh in on possible changes to the next version of the Exam. In September 2014, the ITC was issued to members, boards of accountancy, firms, academia, standards setters and regulators, and business and industry.

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5 Forward-thinking Client Solutions for CPAs

Forward thinkingAs with any service-oriented profession, it is considered a best practice for accountants to stay in touch with clients and provide solutions to their most pressing problems. CPAs can do this in a number of forward-thinking ways, even when their assistance doesn’t necessarily fall within the realm of services the firm provides.

For example, last summer, my firm, Gelman, Rosenberg & Freedman staged a learning and networking event in partnership with the president of a not-for-profit industry group that was driving significant change within not-for-profit business operations. The area of change did not have anything to do with the audit or accounting services our professionals provide to hundreds of nonprofits annually. Rather, the purpose was to help not-for-profits face an emerging industry issue--one for which we had the right connections to allow for an informative and helpful session.

Not surprisingly, more than twice the usual number of clients and friends attended the event, including several from prominent not-for-profits we had never met before. Our audit and accounting events always bring a respectable number of participants, but this event delivered more because our approach meant caring less about whether the topic was a fit for our firm and more about whether it simply provided helpful information about a pressing industry need.

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CPAs Play an Essential Role in Improving the Financial Education of All Americans

As Financial Literacy Month draws to a close, it’s important to reflect on the essential role CPAs play in helping improve the financial knowledge of Americans.  Educating consumers about their finances is the volunteer cause of the CPA profession.  Through the AICPA’s 360 Degrees of Financial Literacy program (360), thousands of CPAs from all over the country volunteer their time to speak with consumers of all ages about their finances. Increasing our citizens’ financial education is critical to our country’s financial success, and the AICPA is leading the way for the CPA profession.

During my tenure as chair of the National CPA Financial Literacy Commission, CPAs across the country achieved much and celebrated many milestones in financial literacy.  I have been involved with developing and releasing several rounds of creative from Feed the Pig, the AICPA’s PSA campaign with the Ad Council, and, along with the rest of the Commission, participated in releasing the AICPA’s first consumer publication, Save Wisely, Spend Happily, authored by Commission member Sharon Lechter, CPA.  Commission members promote 360 and its related programs, and represent 360 before the media and national organizations. Our members are essential in promoting 360 with AICPA leadership, committees, state society leadership and key accounting organizations. I am proud of the work Commission members do and the leadership they provide.

 

 

CPAs in public service have also played an important role in the profession’s financial literacy efforts. On April 22, U.S. Representative and Congressional Caucus on CPAs and Accountants member Michael Conaway, CPA (TX-11) gave a speech on the House floor highlighting April as Financial Literacy Month. Representative Conaway noted the important role that CPAs across the country play in improving the financial literacy of Americans, and how, for over 10 years, the AICPA, members and state CPA societies have worked together through 360.

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5 Steps to Help You Manage Up

Managing up wordleHave you ever accepted a new project even though your plate was already full? Many of us have been in this position. We are so driven to succeed that we say yes to these new assignments without much thought. As a result, we find ourselves stretched thin, making us overwhelmed, discouraged and ineffective. This in turn affects our productivity, negatively impacts the firm or company and derails our priorities.

If you are a young CPA with aspirations—whether your goal is to take on a leadership role, move into management or simply make your current role align more with your vision of the future—there is an approach you can take that will help you get ahead without having to say yes all of the time. It’s called “managing up.”

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AICPA Celebrates 25 Years of Top Technologies for CPAs

TechnologyWhat was technology like 25 years ago? In 1989, when the AICPA conducted its very first Top Technology Initiatives survey (TTI), the most popular technologies discussed were the spreadsheet and, of course, something called the Internet.

It’s 2015; dial-up is a relic and cloud-based alternatives to physical backups are much more common. Today’s technologies thrive on a 24-hour, cloud environment that enables cross-platform collaboration.

The 25th anniversary North American TTI Survey conducted in 2014 expounded on this trend in the profession and broke down the top IT priorities in the United States and Canada, with more than 3,000 CPAs and chartered accountants weighing in on the most pressing issues affecting their delivery of service in firms, and in business and industry.

Here is a list of the top 10 U.S. initiatives ranked by priority. I will elaborate on the top IT concern below.

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Help Us Improve the “Service” in the Internal Revenue Service

Man on hold with IRSIt is no secret that IRS service during this past tax season plunged to a level that I can only describe as unacceptable.  The anecdotes from members keep coming in, and from what we hear, the predicted 53-minute average wait time to reach someone on the IRS Practitioner Priority Hotline is not so much an average as it is wishful thinking. That prediction came from IRS Commissioner John Koskinen, who said in November that the IRS will try “to do as well as we can. As well as we can is still going to be miserable.” 

Taxpayers trying to get through to a representative are not faring much better as discussed in recent news reports and shown in the chart below. In its annual report to Congress, the National Taxpayer Advocate deemed this to be the most serious problem facing taxpayers. 

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The Importance of Financial Literacy Month

Fin Lit Month 2015 2In a few short months, millions of new college graduates will enter the job market with an average of $30,000 in student loans. Student loan default rates are rising as recent graduates struggle to pay down their debt. The reason? New graduates will have degrees that have prepared them for careers or graduate school, but most will not have the knowledge to make sound financial decisions. That is why financial literacy is so important.

April is Financial Literacy Month and this year the AICPA marks the occasion with a renewed sense of purpose. With CPAs as our champions, the AICPA has advanced the financial literacy cause for over a decade, and we will continue to provide leadership in improving the financial understanding of future generations. It is critical not only for their individual success, but for the financial success of our country. For more than 10 years, the AICPA, its members and state CPA societies have been leaders in financial literacy by providing free programs, tools and resources for consumers, educators and more.  The AICPA’s flagship 360 Degrees of Financial Literacy program is the national volunteer effort of CPAs to help all Americans understand their personal finances through every life stage. The program combines grassroots advocacy with free public resources and tools for CPAs to educate Americans of all ages. In addition, Feed the Pig, the AICPA’s award-winning public service campaign with the Ad Council, provides tools and resources aimed specifically at Americans aged 25-34, an age group that is making major life decisions, often with little financial experience or guidance.

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Mine Client Tax Returns for Financial Planning Opportunities

Tax returnAs you transition from tax season and begin thinking about new business, you may find that some of your highest quality leads are right in front of you. Many CPAs tell me they want to begin offering financial planning as part of their practice, but just don’t know how to get started.

One of the best places to start is probably right in from front of you – your clients’ federal individual income tax returns. The return is your easily-accessible roadmap to their financial planning needs.

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Medicare, Blind Men and an Elephant

Blind Man and ElephantLearning about Medicare is similar to the story of the blind men and the elephant. The story of differing perceptions is said to have originated in India. In the tale, several blind men are allowed to touch an elephant, but each man may touch only one part. One man touches the tusk, one a leg, one the trunk and one the tail. After they are finished, they get together and discuss what they discovered. Of course, each man’s description of the elephant is different from the others. Each man is correct, but each man is also wrong.

Medicare is much like the elephant and the blind men. Each beneficiary has his or her own perception of what Medicare is -- or what it is not. One beneficiary may focus on the cost of Medicare, the monthly premiums, and the various co-payments and co-insurance that must be paid. Another beneficiary may focus on the freedom to select a physician or other healthcare provider without having to obtain prior authorization, while yet another person may focus on the prescription drug coverage and the problems in obtaining a particular prescription drug.

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Tax Season Wrap Up: How to Recharge, Regroup and Move Forward

BeachYesterday we asked CPA Letter Daily readers: “How do you celebrate the end of tax season?” More than a majority of the respondents stated that they would celebrate by either taking time off or planning a staff dinner, happy hour or party. Another 32 percent plan to continue working by moving on to the next task on their list. Here we share tips for how to rejuvenate, plan and prioritize the next steps for your practice.

Recharge

Figuring out how to rest can be stressful in itself, especially if you have a larger than expected backlog of work either from returns that still need to be prepared or non-tax work postponed until “after April 15.” Consider the following ideas to get your groove back:

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Broadening Our Definition of Financial Literacy

Micpa-logo-Here at the Michigan Association of CPAs, we’ve embarked on some projects that go beyond the traditional approach to financial literacy. We’ve had the fantastic opportunity to work with Michigan’s Governor Rick Snyder, CPA on several initiatives aimed at our most vulnerable populations, including Reinventing Mi Retirement and the Detroit Income Stabilization Fund Program.  

The Reinventing Mi Retirement initiative was introduced by Governor Snyder in June 2014, and it focuses on providing financial education to help Michiganders better prepare for retirement. The initiative officially kicked off in October 2014 with eight locations in Michigan offering free informational sessions for community members. CPA members participated at locations across the state to provide free financial checkups, helping attendees gain a better understanding of budgeting and financial preparedness. Attendees also received an incredibly thorough financial toolkit, which our members contributed to as well. The event came together in just a few months due to the strong partnership we have with the State of Michigan and the incredible commitment of our member volunteers. We look forward to new initiatives planned in 2015, including events targeting younger people who maybe aren’t thinking about retirement yet, but need to be!

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The Secret to Retaining Top Talent? Development

Professional developmentWhat keeps CFOs up at night? Quite a few things, as it turns out. Increased global competition, the volatile economy, cybersecurity risks and an overwhelming amount of big data—to name a few topics. But it’s another subject which consistently comes up in my conversations with CFOs and other finance leaders, that hits even closer to home: talent. Today’s finance departments have a real need for the right team with the right mix of skills and competencies, not only in accounting, but in business, leadership, communications and other non-financial disciplines.

I’ve spoken to many executives whose organizations don’t have the resources or funding (or neither) to provide the full range of learning opportunities to their employees. According to a study by Deloitte, “Leadership and learning have dramatically increased in importance, but companies seem less capable to address those challenges. While the importance of learning and development quadrupled compared with last year, companies have struggled to redesign the training environment, incorporate new technologies, or employ digital learning tools.”

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Potential State Tax Law Changes on the Horizon

In and out of focusAs we get ready to put away our snow shovels, gloves and winter coats, and take out the sandals and sunscreen (yes – we probably should be using it all year), Congress and many state legislatures are considering some important tax changes. The AICPA and state societies are closely monitoring these issues and ensuring that the profession’s voice is heard:

  • State Sales Tax on Professional (Accounting) Services

With states searching to either expand their revenue base or reduce reliance on income taxes, several states are considering proposals to expand their sales tax to cover professional services, such as those provided by CPA firms. So far this year, 11 states (California, Connecticut, Hawaii, Indiana, Maine, Maryland, Mississippi, Missouri, Ohio, South Carolina, and Virginia) are considering the issue. Recently, Pennsylvania Gov. Tom Wolf (D) proposed a sales tax expansion that would include accounting services, but professional services provided to a business would be exempt.  The AICPA continues to work with state CPA societies and our profession partners to try to stop these proposals from becoming law.

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An (Instagram) Picture is Worth a Thousand Words: Tips for CPAs

Instagram 2 ImageIn the world of social media, new applications come and go every day. With all the different sites and apps out there, it can be hard to figure out which ones to use and how to use them. Instagram has taken the social world by storm and created a footprint that rivals big names like Facebook and Twitter.

When Instagram launched in 2010, it was unclear how successful it was going to be. In December of 2014, Instagram announced that its worldwide user base passed 300 million accounts, putting it ahead of Twitter and proving that it isn’t going anywhere anytime soon. It’s especially popular with Millennials, with 53% of people aged 18 – 29 using it every day.

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Due Diligence Reminders for Tax Extensions

4868 formOur hours get longer as we approach the downhill stretch of filing season, and it gets more tempting (if not mandatory) to file an extension for many clients. The proper preparation of an extension involves more than the entering of numbers on the extension form. And, the demands of filing season sometimes take over and quality control procedures and professional standards are overlooked in an effort to get everything filed.

This year will be especially complicated with Affordable Care Act items, a late start with extenders, many late documents from third parties and a culture that expects convenience and increasingly instant results. But the AICPA Code of Conduct, Circular 230, AICPA Statements on Standards for Tax Services (SSTSs) and the Internal Revenue Code (IRC) all still need to be considered in the preparation and filing of extensions for clients. The applicable standards include:

  • Circular 230 Sections 10.22, Diligence as to accuracy, and 10.36, Procedures to ensure compliance, mandate considerations to be followed in the preparation of federal returns, including extensions by practitioners.
  • AICPA Code of Professional Conduct Rules 1.100, Integrity and Objectivity, and 1.300, General Standards, provide rules for AICPA members to follow.
  • SSTSs No. 1, Tax Return Positions, and No. 2, Answers to Questions on Returns, provide more insight into due diligence in the preparation of returns. Also, SSTS No. 4, Use of Estimates, would be applicable for practitioners working with estimated amounts of income and deductions.
  • IRC section 6081(a) authorizes the Treasury to allow an extension of time to file for up to six months.

Let us first remember the extension we are filing is the taxpayer’s extension and not our extension. Therefore, the client must be informed that the amounts shown on the extension represents an estimate of their income and the figures are their responsibility. Where possible, assign staff to contact clients as soon as possible. Sufficient time is needed for due diligence and other considerations in order to properly and accurately file an extension.

Further, we are not allowed to file extensions just because clients expect them; we need their explicit permission. Form 8878, IRS e-file Signature Authorization for Form 4868 or Form 2350,is available for this purpose.

In order to stress this point with clients, Gerard Schreiber’s CPA firm communicates in writing with clients after filing March 15 returns and requests written authorization to file an extension of time on their behalf. The letter will also indicate:

  • Whether the taxpayer authorizes the firm to file an extension on their behalf;
  • All Forms W-2 with tax withheld should be returned with the signed letter;
  • Estimated tax payments made should be listed in the space provided;
  • This is an extension of time to file and not to pay. Any balances due will incur penalty and interest; and
  • If estimated tax payments for the next tax year are required, they should be made.

This may seem a bit too much, but we can never be too careful with this topic. The legal landscape dictates for us to be overly cautious in both return preparation and extension preparation.

We all have seen taxpayers who call and indicate that they are “going through difficult times” or “will owe no tax” and therefore do not need to make any estimated tax payment. These same clients will then show up on October 15 with a Form 1099 or Schedule K-1 for a large amount of income and owe the IRS a significant amount of tax as a result of not making estimated tax payments or a payment on April 15. Some clients are confused or incensed at being assessed interest and penalties. Some clients blame the CPA, but this argument falls flat when the CPA did his or her due diligence.

The IRS has sometimes invalidated an extension due to the use of a bad faith estimate. SeeCrocker v. Commissioner, 92 T.C. 899 (1989) and Oliver v. Commissioner, T.C. Memo. 1997-84 for more on this subject. Besides the IRS, there has been activity in local jurisdictions where CPAs were held liable for extensions filed with bad estimates.

Just some food for thought at this late date. Good luck - we’re almost there.

Gerard Schreiber Jr., CPA, Partner, Schreiber & Schreiber CPAs in Metairie, LA. Gerard specializes in tax, accounting and consulting matters for individuals and small businesses. He serves on the AICPA Tax Practice Responsibilities Committee and has authored numerous courses and articles on various tax subjects.

Valrie Chambers, CPA, PhD, is an Associate Professor of Accounting at Stetson University in Celebration, FL. She has over a decade of public accounting experience as owner/partner-in-charge of a CPA firm in Houston that specialized in advising small business owners. Dr. Chambers has been published in numerous journals and received the Texas Society of CPAs Outstanding Accounting Educator Award for mid-sized Texas universities in 2012. She has volunteered for the AICPA and the IRS’ Volunteer Income Tax Assistance in Corpus Christi

Form 4668 image via Shutterstock

Happy Financial Literacy Month

Fin Lit Month 2015Today, April 1, kicks off Financial Literacy Month. In addition to our year-round efforts, the AICPA, and CPAs across the country, participate in this annual event centered on improving Americans understanding of financial principles and practices. As part of this year’s festivities, 360 Degrees of Financial Literacy has launched a newly redesigned website with an updated set of tools and resources to better help Americans understand their personal finances and develop money management skills at every stage of life. 

Here are some of the other great, free events and resources to help your friends, family and clients improve their financial knowledge. 

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Accounting Scholars Leadership Workshop Empowers Minority Accounting Students

ASLW image 2The American Institute of CPAs recently announced that the application period for this year’s Accounting Scholars Leadership Workshop (ASLW) is now open. The Workshop, now in its 21st year, is an invitational program for minority accounting students who plan to pursue the CPA license.

The Workshop will feature interactive programs, speakers and panel discussions aimed at improving attendees’ professional skills while highlighting the many career benefits of earning the CPA license. Sessions will cover issues such as strategies for passing the CPA exam, navigating corporate culture, financial literacy, and thinking like an entrepreneur

This year’s Workshop with be held from July 29-31 at the Baltimore Marriott Waterfront, 700 Aliceanna Street, Baltimore, MD. Qualified candidates may apply from now until April 30, 2015.

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Snow White Meets the IRS and Other Fractured Fairy Tales

Fairy tale imageIf you have ever watched the television show Once Upon a Time (one of my favorites) you know that it offers some compelling twists on popular children’s stories. Peter Pan author J.M. Barrie was probably rolling in his grave when his main character, a lighthearted kid who just doesn’t want to grow up, emerged as an evil teenager, but at least a relatively happy ending followed. 

Watching the show and working for the world’s largest association of CPAs got me thinking:  what would our beloved fairy tales be like if a CPA were to write them and perhaps play a role?  Here is my best tongue-in-cheek guess. Let us know if you have others you’d like to share.

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Cathy Engelbert Makes History This Women’s History Month

Cathy-engelbert-cpaEvery March, Americans honor the contributions of both notable and ordinary women by celebrating Women’s History Month. Two pioneering women within the accounting profession were Christine Ross and Mary T. Washington.

In 1899, Ross became the first female CPA in the U.S. Nearly 50 years later, Mary T. Washington became the first black woman CPA in the U.S.  Since then, an increasing number of women have entered the profession, and today, half of all undergraduate and graduate accounting students are women.

Cathy Engelbert Writes a New Chapter

Now in 2015, there is a new reason to celebrate—on March 11, Cathy Engelbert, CPA, took the helm as CEO of Deloitte LLP, making her the first female CEO of a Big Four firm in the U.S.

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Reasoning with Reasonability

There is an abundance of terms and phrases that American’s use to make the act of savings feel less painful, like evaluating, bargaining, or prioritizing. But no matter how you phrase it, saving can be difficult for even the most responsible person, especially with matters that have a strong emotional component. For instance, when it comes to once in a lifetime events, like a wedding, people are much quicker to concede on their financial plan. In fact, according to The Knot's annual Real Weddings Study, the average cost of a wedding (excluding the honeymoon) reached an all-time high of $31,213 in 2014, up 4.5 percent from 2013. This is the fourth consecutive year of gains. 

Pig - MarriedWhile many argue that increased spending may reflect the improving economy, The Knot’s study showed that the increase in spending goes beyond inflation and was represented across all income levels and regions. Additionally, 45 percent of couples said they strayed from their wedding budget, and 23 percent said they didn't even have a budget to begin with. From a financial planning standpoint, it may seem unreasonable to spend outside your budget, but is it any more reasonable to ask someone to concede on such an important, emotional event? Where do you draw the line?

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Learning that’s Ready When You Are, Wherever You Are

Reading at airportBetween the demands of the job I love, my travel schedule (hectic even when the flights are hassle-free and on time) and my family commitments, there’s just not much time left in the day. Sound familiar? In our profession, sometimes “free time” seems like a non-existent commodity.

On top of all of this, I’m always looking for opportunities for learning. But when? And with so many great options for CPE coming from so many varied sources, wading through it all can be both daunting and time prohibitive. 

At the airport recently, I had a little time to kill before my flight and thought it would be the perfect opportunity for some CPE. Instead of searching several different sources, I went straight to the new AICPA | CIMA Competency and Learning website.

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Chicken & Waffles + Potato Chips = Innovation

Chicken and Waffle Chips2Ever heard of Chicken & Waffles potato chips? What about Dulce Almond ice cream? Frito-Lay and Ben & Jerry’s came up with these unique flavor ideas by soliciting opinions and contributions from large groups of individuals, a process known as idea crowdsourcing. Idea crowdsourcing is an excellent method to gather collective knowledge and gauge market interest.

Future-focused companies are increasingly turning to idea crowdsourcing to gain insights, gauge market interest and ignite innovation. They see organizational enhancements as well as external benefits like improved customer satisfaction. Here are a few more:

1.  Foster knowledge and solutions

Two heads are better than one, right? What about 20 heads? Or 200? Idea crowdsourcing taps into collective knowledge -- the wisdom of many individuals, teams, and communities -- to create a deeper understanding of issues while gathering tremendous insights. It diversifies cognitive and creative talent, providing better ways to solve problems.

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What Employers Assume about the ACA Can Hurt Them (and Staff)

Healthcare WordleThe Affordable Care Act is here to stay and continues to challenge CPAs with many unanswered questions and some mind boggling confusion. Every time I think I understand the ACA, rules change and interpretations contradict themselves. Despite the high frustration level, our own firms, our companies and our clients depend on us to guide them.

As a CPE discussion leader for the AICPA and others, I am continuously challenged by participants who complain about leaving class with more questions than answers on ACA. This situation is not about to resolve itself.

When the law was passed in 2010, the knee jerk reaction for many employers was: “We'll just cancel our health insurance plan and pay the penalties.” This is not a good answer. Take my own CPA firm as an example. We employ about 35 people and do not have to offer affordable health insurance since we have fewer than 50 full-time equivalent employees. Although Full-Time Equivalent Employee is defined three different ways in the ACA, our firm is definitely exempt from penalties.

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CPA Outlook Index Finds Increased Optimism for US Economy, Lowered Expectations Elsewhere

The AICPA’s CPA Outlook Index (CPAOI) fell four points in the first quarter, the first time the Index has dropped in more than two years. The Index, which polls chief executive officers, chief financial officers and controllers, found these executives were tempering their expectations for profit, revenue and expansion in the coming year.

Optimism about those key performance indicators still remains high, but the survey found a decline in sentiment since last quarter. The one survey measure to rise from the previous quarter was sentiment about the US economy, which found that 68 percent of respondents are now optimistic about the U.S. economy, a new high for the survey.

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3 Hedging Strategies for Concentrated Stock Positions

Stock market graphTaxpayers often have a large percentage of their wealth tied up in a single stock, but a single stock portfolio is unfavorable for two reasons. First, it is risky to bet your financial future on the performance of a single company, and second, the volatility associated with a concentrated portfolio could be expected to substantially reduce returns.

In the research report The Enviable Dilemma: Hold, Sell or Hedge Stock, for example, the authors found that from 1984 to 2003, the annualized compounded return on the S&P 500 was 13%, while the annualized compounded return for the average stock was only 9.9%, nearly a 24% reduction.

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Rules and Resources for ACA Due Diligence

Due diligenceThe filing season is upon us and the question practitioners are asking themselves is “What due diligence steps are necessary for getting Affordable Care Act information from clients?”

The ACA provides a new challenge to practitioners in preparing 2014 returns, which will require more due diligence and effort to comply with these new rules.

The IRS, the AICPA, and others have provided many resources to practitioners on understanding the filing requirements of the ACA. In addition to these resources, practitioners should note the due diligence requirements under Circular 230, the AICPA Code of Professional Conduct, and the AICPA Statements on Standards for Tax Services that provide enforceable standards for AICPA members:

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CPA Potential Nightmare Clients: Walking Dead or Game of Thrones?

Petyr BaelishCould you use a break these days? Many of us turn to the tube when we need a mental break, but eventually our minds drift back to the office. Perhaps you have considered what it would be like to have the characters from your favorite television shows as your clients. We put our heads together and came up with the following list of television characters whom we think would be challenging clients.

Walter White, Breaking Bad. Have you ever had a client who was, say, a mild-mannered high school chemistry teacher, but you still felt there was something just a little off about him? White has built a meth-dealing empire in order to provide for his family in light of his terminal cancer diagnosis. Has he filed taxes in recent years? Are his financial statements in order? Does he have an estate plan? You might well be nervous to ask these questions, given the guy’s fairly hostile intensity. “I am the danger,” White proclaims at one point, and it would seem smart to believe him. 

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Big Data = Big Opportunities

MoneyballDid you see “Moneyball?” It was a fascinating look at how an underperforming professional baseball team used big data (player stats and figures) and computer-generated analytics to identify and hire high value players who were available at low salaries. To the surprise of everyone, it gave the once hapless team a decidedly competitive advantage on the playing field.

That’s the power of big data.

Today, big data is big news in the global marketplace, as organizations look for their own competitive advantages. Should we be surprised? Big data offers unlimited potential to change the way business is done, for almost any type of company. In a recent CGMA survey, almost nine out of 10 finance professionals agreed the revolution is not only coming, it’s already here.

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Are You Cheating on Your Spouse Financially?

Couple financesDo you have a secret bank account or credit card that your spouse doesn't know about? Do you lie to your partner about how much you really spend? The topic of financial infidelity, whereby spouses lie to one another about money, emerged as one of the surprising topics of discussion at a recent meeting of the AICPA National CPA Financial Literacy Commission in Washington, DC. 

Commission members discussed a recent creditcards.com financial infidelity report that showed that about 20 percent of people admit to spending $500 or more without telling their significant other. According to the study, men are more likely to both spend more than $500 and have a secret account.

One way to prevent this is by setting aside some time with your partner (away from busy or stressful times) and having an open discussion about your spending and financial goals. Another solution offered was to have a joint account, but open separate accounts to make individual purchases. The key is having a trusting partner with whom you can have an honest and open dialogue about your finances.

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AICPA Announces 2015-2016 Legacy Scholarship Award Applications

The American Institute of CPAs recently announced that the AICPA Legacy Scholarship application is now available on ThisWayToCPA.com for the 2015-2016 academic year.

14089-331 AICPA Legacy Scholars Seal_color_FThe AICPA Legacy Scholars Program will provide more than 100 scholarships for the 2015-2016 academic year, totaling more than $380,000, to deserving undergraduate and graduate accounting students from across the nation. New this year is a more convenient, streamlined application process which allows students to fill out a single application for all four AICPA Legacy Scholarship awards.

“The AICPA has a long history of investing in the future of the profession by awarding scholarships to highly qualified accounting students,” said Joanne Fiore, AICPA vice president, professional media, pathways and inclusion.

Since 2011, the Institute has been awarding annual scholarships under the AICPA Legacy Scholars program umbrella, expanding the financial award to add a service component. The service aspect of the program is designed to help students develop the soft skills, including leadership and communications, needed to maintain a successful career. Scholarship recipients plan, promote and execute an eight-hour service project each semester. The service activity must relate to accounting, serve the community and be meaningful to the student.

“Our AICPA Legacy Scholars program helps students defray the cost of their education, while helping instill a commitment to public service that the accounting profession is known for,” Fiore added.

AICPA Legacy Scholars are Student Affiliate Members of the AICPA, a free membership option available to all currently enrolled college students. Each AICPA Legacy Scholar is assigned a coach to help guide the student’s service project and offer advice on questions related to the accounting profession. 

For more information, check out this short video 

  

The AICPA Legacy Scholars program comprises four distinct awards:

·         AICPA/Accountemps Student Scholarship

·         AICPA Foundation Two-Year Transfer Scholarship

·         AICPA John L. Carey Scholarship

·         AICPA Scholarship for Minority Accounting Students

Scholarship funding is provided by contributions from the AICPA Foundation, Robert Half International, Accountemps, the New Jersey Society of CPAs, the Accounting Education Foundation of the Texas Society of CPAs and the Virgin Islands Society of CPAs.

Students can apply online at ThisWayToCPA.com. The application deadline is April 1, 2015. For more information, contact scholarships@aicpa.org.

 

Due Diligence and ACA: A CPA Raises Some Tough Questions

ACA blog 1Editor’s Note: Last January, Janet Hagy, CPA (and AICPA Tax Section volunteer) wrote a popular blog about her concerns regarding new rules for health reimbursement arrangements and their impact on her staff. We asked Ms. Hagy to give us an update and also discuss the Affordable Healthcare Act compliance concerns she has as a practitioner for the current tax season.

What I have learned in the last year about the ACA adds extra concerns to this already complicated tax season. We have two major compliance challenges right now – coverage documentation and standalone health reimbursement arrangements (HRAs). Otherwise, penalties, higher fees and more frustration could be waiting for many of us.

The first issue is that we as CPAs have sign-off on whether our individual clients had the required health insurance for each month in 2014 for all household members. We are probably not going to receive any 2014 forms 1095-B or 1095-C from employers or insurance companies substantiating what our clients tell us about their coverage, since these forms are voluntary for 2014 and do not become mandatory until 2015. 

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10 Simple Tips Any CPA Can Use to Strengthen Client Relationships

DoughnutsDo you remember a time when sending a note meant writing a handwritten letter? When speaking on the phone always meant calling a landline? Today, email and smartphones often replace those forms of communication. Don’t get me wrong – it is great to be able to reach someone in a moment’s notice, but there is something to be said about the personal touch associated with those other methods of communication.

With all my reliance on digital communications, I sometimes have to remind myself of the value of returning a client’s call rather than sending them a quick email. Although the latter is more efficient, a phone call can make a world of difference in clarifying any issues and developing rapport.

Below are 10 simple but significant tips that I follow to help strengthen my relationships with clients:

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Big Changes Facing Your Firm? New MAP Survey Results Can Help

Imagine your firm’s future if your monthly partner meetings become challenging. What if everyone offers different ideas about what your firm should be spending on office space or disparate opinions about compensation, billing and utilization rates going forward? What if you’ve got a merger, a retirement and the buy-in of two new partners on the table? Sounds like you need sound benchmarking data to help you make some important decisions

Fortunately, results of the 2014 National Management of an Accounting Practice (MAP) Survey conducted by the AICPA Private Companies Practice Section (PCPS) and the Texas Society of CPAs (TSCPA) can provide you with the information you need to make the right choices. The survey’s comprehensive benchmarking data on firm finances and practice management options allow you to compare your firm to those in the same market and of the same size.  The survey can be a vital tool in your strategic planning and decision making, and the new platform enables survey participants to see their own confidential data pre-populated beside the comparative benchmarks. Watch this video for details. (The results provide rich data that all firms—even those that didn’t participate—will find useful. If your firm didn’t participate, you can still access survey reports, but you’ll need to compile your own firm’s data for comparative purposes. This video provides a tutorial.)

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How the New Congress Might Affect the CPA Profession

Capitol2Meet the new Congress. Same as the old Congress? That remains to be seen. The 114th Congress opened on January 6 with 74 new members of the House and Senate, 104 women – more than ever before, and the largest House Republican majority since 1929. Those are the numbers, but let’s look at what they mean for the CPA profession.

Our profession’s core services are greatly impacted by the legislators and regulators who set policy and standards. The November election brought many changes and several new faces to Washington. One thing that did not change, however, was a strong CPA presence. I was very pleased that nine CPAs were reelected to the House. I know that these nine individuals, as well as other CPAs, whether as elected officials or active constituents, will continue to provide crucial experience and guidance. In light of the new representatives, staff members and committee chairs in the Congress, we have been reviewing our advocacy and education efforts on initiatives affecting the profession and the public.

We expect Congress to focus on certain issues in 2015. Here is a brief summary of the more significant ones.

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The Open Workforce Presents New Challenges (and Opportunities) for Finance Professionals

Open workforce mini infographic2Almost overnight, organizations have found themselves managing an entirely new paradigm: the open workforce. Driven by globalization, technological advances and a constantly fluctuating market, businesses must now look for expertise from new sources to work with their in-house teams. This new talent includes a complex mix of local and international freelancers, contractors, consultants and businesses partners.

New CGMA research shows that in more than a quarter of all organizations globally, at least 50 percent of talent is external. While the open workforce trend started in the US and Canada, it is expected to become the norm for more than a third of organizations worldwide within the next five years.

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Disaster Planning and Recovery Advice from CPAs

Blizzard prepWith a historic blizzard bearing down on the Northeast, many people have considered their physical well-being. They’ve stocked up on milk, bread and blankets to weather the worst.

But what about their fiscal well-being?

Events like this one also require financial preparedness – having cash on hand in case the power goes out and insurance information handy in case snow-laden trees come crashing down.

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Top 10 Tax Resources for the 2015 Tax Season

10 tax tipsA mother tries to get her son out of bed in the morning to go to school, and says, "Come on, lazy head, get up. You're going to be late.” But he remained in bed, burrowing deeper under the covers. Finally, she pulled him out, and he said, "Mommy, I can't go to school. The kids throw sticks and stones at me, and they call me names." "But you have to go anyway," she said.  "Why?" he asked. "First of all," she said, "you're 50 years old. And, second, you're the principal."

Your clients hopefully don’t throw sticks at you, but you are the CPA and like the principal, you need to show up, right?  So fight the urge to burrow - listed below are some popular tools from the AICPA to help you.

(By the way, credit for that joke goes to former NBC president Michael Gartner, who included it in an excellent speech on the 10 Rules for Life at my college commencement. Good luck prying that date out of me.)

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Where Is Your Firm on the Journey Toward Greater Diversity and Inclusion?

MLKOn the third Monday in January each year, AICPA and Americans across the country recognize the life and legacy of Martin Luther King, Jr. Between 1955 and 1968, his strong leadership helped transform race relations in America, and his powerful voice gave the nation courage to continue working toward racial equality. He led millions in this movement, which resulted in historic reforms that benefit all of us—and he continues to inspire the ongoing work of diversity and inclusion happening today.

The accounting profession has been developing effective diversity and inclusion approaches for many years; early on these efforts focused mostly on gender diversity. Today’s initiatives comprise a much wider range of differences and similarities—not only in gender, but in ethnicity, age, generation, religion and sexual orientation.  

Making strong efforts to be more inclusive in the accounting profession is critical, not only because it is the right thing to do, but because trends show that the increased demand for CPAs and accounting professionals will eventually outpace the supply. Some of reasons for this trend are:

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The CFO Has to Be a Jack-of-All-Trades — and Master of Them, Too

CGMA- jack of all trades2How should up-and-coming CFOs regard their role in the corporate hierarchy? They might do well to think of themselves as “the voice of reason.”

There were many comments about the shifting role of the CFO at the recent World Congress of Accountants 2014. But to me, none rang truer than the quote above, expressed by Carol Calandra, CFO, Global Markets, EY Global.

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In the News: Students from UNLV Earn First Place in AICPA Accounting Competition

UNLV9_t653The American Institute of CPAs recently announced that students from the University of Nevada, Las Vegas have earned first place in the 2014 AICPA Accounting Competition.

AccountingWeb reports that the UNLV team’s top finish in the competition earned a $5,000 award for their school. Students from North Carolina State University placed second, taking home $3,000 for their university. The third-place team from the University of Southern Indiana earned $2,000 for their school.

In addition, each of the three finalist teams received a $10,000 award to be split among the team members. All of the awards are funded by the AICPA Foundation.

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Give Thanks, and Give Back

Hands raisedNo matter how many times you may have reminded yourself, it’s a fair guess that you most likely did not completely eliminate the urge to splurge during the recent holiday season. Even though your family may have said no gifts are necessary, it can be hard to swallow the idea of showing up empty handed—my immediate family says year after year that “our presence is our present,” and yet we all show up with armloads of gifts, every year. The last thing we want is to cause our loved ones financial distress at our expense, so how do we fight the urge to splurge in the year ahead?

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5 Key Social Media Trends for CPAs in 2015

Social mediaThis year’s social media trends forecasts are buzzing over innovations such as the integration of ecommerce with Facebook and Twitter, wearable technology and sophisticated analytics that report return on investment. While it will be interesting to see the development in these areas, there are additional trends that can significantly impact your firm’s success on social media. Here are five trends to consider as you go about implementing your firm’s social media strategy for 2015.

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Accountants Play Critical Role in Establishing Global Transparency

Transparent globeI’ve always thought the world would be a better place if only there were more professional accountants working throughout organizations. Each and every day, we bring transparency and accountability to businesses and governments around the globe. We promote financial integrity, expose wrongdoing, and lift the veil of uncertainty to shine light on the truth. When you think about it, we are much like the Swiss-Army knife for modern business—equipped to bring solutions in countless ways.

Tax work? We do that. Financial statements? We do those too. Interpreting human capital and supply chain implications of the latest regulatory standards? Your CPA has you covered.

If CPAs are like the Swiss-Army knife, then transparency is the Master Key that unlocks good business practices; transparency holds decision-makers accountable, leads to better management decisions, and provides the reliable, actionable information on which investors and the free market rely.

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4 Tips for Turning Tax Season Lemons into Lemonade

Tax- lemonsRaise your hand if every article on the upcoming tax season has left you reconsidering your choice of profession? The messages are everywhere and are not painting a rosy picture of what tax practitioners can expect. Well, I promise not to drudge up ACA, repair regulations, foreign accounts or countless other changes - enough has been said on those. Instead, I have a few ideas that you can try the next time you spot a tax season lemon.

Whether your firm is big or small, gone completely high-tech or still doing everything manually, there are always opportunities for improving efficiency, exploring new service lines, reinforcing your value to clients and raising your fees. This lemonade recipe has four ingredients, and simply requires a notebook, a plan and a commitment to try something new.

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CPA Exam Q1/Q2 2015 Score Release Timetables

The Q1/Q2 2015 score release timetable is now available. Score release timelines are updated biannually on AICPA Insights and on the CPA Exam website. For more information about score release and the scoring process, please visit the Psychometrics and Scoring page.

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

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What Could a Next-Generation Peer Review Program Look Like?

The computer scientist and tech pioneer Alan Kay once said: “The best way to predict the future is to invent it.” That’s been the mantra in Silicon Valley for 40 years. Inventing the future is the opportunity the CPA profession has today with the release of the concept paper Evolving the CPA Profession’s Peer Review Program for the Future: A provocative vision of what practice monitoring could become.

Two years ago, based on input from the AICPA’s governing Council, a task force sanctioned by the Board of Directors began exploring ways to raise the Peer Review Program’s current practice monitoring efforts to even higher levels of relevance, strength and effectiveness.

Developed with research and input from various stakeholders, the concept paper offers a glimpse into practice monitoring with a futuristic view. The paper asks us all to imagine the possibilities of what practice monitoring might look like in the next 5 to 10 years and beyond.

This video provides a quick overview.

 

 

 

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Happy Holidays from AICPA Insights

Winter

We wish you a joyous holiday season and a Happy New Year. In celebration of the holidays, AICPA Insights has completed its blog postings for 2014 and will resume the first week of January. We look forward to providing our readers with more informative and thought-provoking blog posts in 2015. 

Winter scene image via Shutterstock

5 Tips for Building Your Financial Planning Practice

PFP blogCPA financial planners are always looking for ways to help clients and their extended families realize their dreams and provide for future generations.

There are plenty of financial advisors in the marketplace, but not nearly as many as there are CPAs who work with individual clients and understand their needs from a tax and accounting perspective. That’s the edge we have that makes a difference. CPAs are well positioned to offer holistic financial planning services – ranging from traditional tax and estate planning to retirement, investment and risk management planning.

Last month, as part of the AICPA’s PFP Section’s CPA Financial Planning Thought Leadership series, I moderated the webcast, “Outlook for the Financial Planning Profession.” Panelists shared their perspectives on trends that affect their clients and the CPA financial planning profession, as well as how they integrate financial planning into their firms. While there are many different approaches that can be successful in this area, the key is to focus on your clients and what you do best for them.

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Igniting a Passion for Learning

Last time, as part of a discussion on AICPA’s Future of Learning initiative, I focused on the Future of Learning Task Force recommendation to innovate and experiment, including ideas on selecting the right delivery method for a topic, ways to integrate technology into learning and, perhaps most importantly, ideas for small changes to delivery that can have a huge impact.

Creating a Spark

Today, let’s focus on the recommendation to “ignite a passion for learning.”

In a professional environment where complying with CPE hours often places more value on how much time you spend in a classroom than the quality of what you learn—it is not uncommon for a CPA’s desire to learn to be extinguished and replaced by a resignation to comply.

The importance of motivating CPAs to build competency in meaningful ways cannot be undervalued. And, as we noted in the report, nothing motivates and engages learners like meaningful, purposeful experiences. Whether you create regulation, develop employees or deliver learning, challenge yourself to answer the following, Education for what purpose? If you keep this in mind you will help professionals make the most out of each learning experience.

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