SOC 2 reports get an update

SOC 2 updatesSOC 2® standards have been updated. If you perform these engagements, you need to check out the recently updated SOC 2 guide to make sure you are performing these services according to AICPA standards.

Released last month, the updated guide is a “how to” for service auditors performing SOC 2 examinations to report on a service organization’s system controls relevant to security, availability, processing integrity, confidentially, or privacy. There are three major updates practitioners will want to pay attention to:

  1. Alignment with clarified attestation standards
    The guide conforms with the updated SSAE No. 18 (Clarified Attestation Standards) – meaning it is a vital tool for practitioners to use in developing standards-compliant reports. For example, it includes updated information on requirements related to requesting written assertions and performing risk assessments.

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How to take the stress out of debt

Infographic_Millennial_Debt_AICPA (002)If you’re like most Americans, you probably have debt. But don’t worry, you’re not alone. In fact, according to a recent telephone survey of 1,004 U.S. adults conducted by Harris Poll on behalf of the American Institute of CPAs, nearly three-quarters of Americans are living with debt driven by factors like everyday expenses, a lack of income, mortgage costs and student loans. More concerning is the number of Americans whose debt is making them anxious, keeping them up at night and causing problems in their relationships.

I sat down with Dr. Sean Stein Smith, CPA, member of the AICPA’s National CPA Financial Literacy Commission, to talk about how financial planning can help Americans whose lives are negatively impacted by debt.

Jonathan Lynch: For many Americans, living with debt is a mental as well as financial burden. In fact, because of their debt, three-in-ten Americans admit to stressing about everyday financial decisions. For those who feel overwhelmed by their debt, what steps would you suggest they take to take back control?

Dr. Sean Stein Smith: The first thing to realize is that if you are worrying about debt, you are not alone, and this is nothing to be ashamed of. It doesn’t matter how much money you make – there are steps you can take to get back in control.

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Everyone fails: Here’s how to bounce back

BounceEpic fail. We’ve all been there — set out to do something great, only to come up a little short of our expectations. But that’s when the real test happens. Do we choose to throw in the towel or do we push through and use our experience with failure as motivation?

Author J.K. Rowling, who experienced some disappointments before publishing her first blockbuster Harry Potter novel, said that “it is impossible to live without failing at something, unless you live so cautiously that you might as well not have lived at all, in which case, you fail by default.”

If you’re preparing to take the CPA exam, you may be wondering about the possibility of failure. Did you know a significant number of successful CPAs don’t actually pass the exam the first time around? In fact, an average of 50% of test takers fail at least one section. The average candidate sits six to seven times before passing all four sections. So, if you’ve had a setback in one or more parts of the exam — or are worried that you might — don’t stress. You’re not alone.

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6 guilt-free food ideas for busy season

Farmers marketSnacks continually rank near the top of everyone’s favorite workplace perks. Having food available in the office during busy season is an even bigger plus. Celebrate World Health Day by offering healthy alternatives, because worrying about gaining weight or blowing up unhealthy indicators like blood pressure and LDL cholesterol is stress we just don’t need right now!

Consider these tips for serving healthy snacks in your office this busy season:

  1. Set up a snack box. Build your own snack box using a serving tray with drawer organizers or a large basket. You can pick these up at a neighborhood retailer or order them online. If you’re short on time, vendors such as Naturebox and Snack Box Pros (also available from Office Depot and Sam’s Club) offer pre-assembled healthy snack boxes or allow you to build your own from their menu (see healthy snack tips below for help with selections).

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The one game changing skill you should focus on for success

Competitve intelligenceWhy is it that some people rise to higher levels of success than others? Is it simply a matter of being in the right place at the right time? Or are some people born with certain qualities that make them more capable of success than others? When comparing star performers with average ones, a consistent unique strength does emerge, but it has nothing to do with intelligence, education or natural-born talents. The “it factor” these super stars possess is called emotional intelligence (EQ). Recent studies show 90% of high performers at work are also high in EQ. Additionally, people with high EQ make about $29,000 more per year on average than those considered to be low in EQ. The great news is this game-changing skill can be learned by anyone willing to focus.

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One topic investors agree is critical to decision making

Water leafCape Town’s Day Zero has been postponed—for now. That’s the term being used to describe the impending extreme water crisis in my native South Africa. I’ve seen how it affects the people who live there, as they scramble to hold off what seems inevitable. My friends in Cape Town only shower twice a week and save their shower water to water their gardens. Local pools around the city are empty, hotels can’t wash linens as often as in the past and the agriculture sector has been hit.  The severe water shortage threatens employment, tax revenues and municipal credit ratings. The trickle down (a term that has never been so literal) reaches business owners and investors as they consider the rising costs of a resource they once took for granted.

 

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Introducing our newest heroes: “The (CP)A-Team”

CPA TeamPop culture seems to be obsessed with the 1980s.

Remakes of popular blockbuster hits are now the norm for movie-goers. From “RoboCop” to “21 Jump Street” to “Footloose,” today’s entertainment is all about nostalgia.

So, it’s no surprise that television’s favorite action drama, the “A-Team,” would make a comeback. Updated for 2018, the reboot is coming to prime time. And this time, the fearsome foursome is taking on the single greatest threat to our security: cybercriminals.

Airing at 8 p.m. Wednesdays on your television or tablet is America’s newest special task force: “The (CP)A-Team.” Each half-hour episode features the all-CPA unit as they travel the world detecting and responding to cyberattacks and data breaches.

Cyberattacks are on the rise. Personal information is swapped for pennies on the dark web. Ransomware is lurking in the shadows of your desktop. And one team perseveres against it all to expose cyberthieves and other scoundrels.

In 2002, this crack team of auditors met on the job. Fresh out of college and stepping into the vast world of accounting, they found in each other a bond that nothing could shake. Once they graced the cubicles of Metro Zero, New York City’s finest financial institution. Today, they survive as practitioners with a purpose: protecting millions from the loss of sensitive personal and corporate information.

Jane “Caesar” Jones is a master of disguise. She is most commonly seen portraying beauty school dropout “Mrs. Bentley,” a salon owner who uses weak passwords and unsecured wifi devices as part of a ploy to entice small-time hackers. As the leader of the group, it was Caesar’s idea to go rogue after discovering Metro Zero shared client data. Now on the run, she and her team aim to level the playing field and repair the damage done.

Nick “N.N.” (Negative Nelly) Nichols is the muscle for the (CP)A-Team. N.N. is always in a bad mood but is the first on the scene when things get hairy. Armed with only a laptop and personal hot-spot, N.N. attacks hackers before they can reach your server. A reformed hacker, his secret past is known to only Caesar.

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7 things every nonprofit should know about restricted assets

Restricted cashYour nonprofit is on a mission. Like any other business, your work requires careful accounting and financial reporting. Unlike other businesses, your not-for-profit organization has special requirements on the use and reporting of restricted assets.

As an auditor specializing in the nonprofit sector, I get a lot of client questions about restricted assets. The following are some of the most common issues we encounter and tips for dealing with them.

  1. Fundraisers can create unintended restrictions. Donors like to support programs and projects near and dear to their heart. Your fundraising staff is skilled at designing heartfelt appeals. If you’re not careful, overly specific fundraising language can create restrictions that limit your ability to operate. Keep your accounting staff looped into the fundraising communications planning and approval process to avoid problems down the road. When in doubt, run it by your auditor.
  2. “Restricted cash” may include more than you think. Many nonprofits present cash and cash equivalents that have restrictions in multiple line items on their statements of financial position. In some cases, these line items are labeled something other than “restricted cash” or “restricted cash equivalents,” such as:

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Blockchain could be your solution to spreadsheet fatigue

Block chain 2Over 25 million Americans are still dealing with repairing airbags from one of the largest series of recalls in U.S. history. Car owners are waiting months for repairs – and many are unable to drive their cars while they wait for them to be fixed. Talk about inconvenient, expensive and frustrating.

Now imagine if airbag recalls didn’t have to be such a mess. Blockchain offers an intriguing solution.

Blockchain is a distributed ledger system that can be put to work managing our supply chains. Think of a big spreadsheet or Google doc that you use to record every transaction in a supply chain – from manufacturer to end user. Now imagine that every supplier, manufacturer and seller in the chain has access to that spreadsheet at the same time as you and is updating it with verified information in real time. Except, unlike a Google doc, you can’t retroactively alter information on the blockchain – making it extra secure.

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Finding your second wind during busy season

Final sprint of busy seasonThe last stretch of busy season can be tough.

So how do you get that mojo back? Just like your car, your body and brain perform better under certain conditions. Use that analytical brain that makes you a great CPA and run through some key sources of energy to see where you can replenish.

Time to do a quick 6-point check:

  1. Air – When was the last time you exercised? How often are you moving around during the day? A runner’s ability to get a second wind in a marathon depends on how well they restore oxygen to their muscles. Your brain needs a little more oxygen to function best in the tax season marathon. Exercise stimulates blood flow to your brain, which leads to more oxygen and more energy. If taking a brisk walk or hitting the gym is not feasible, here are some exercises you can do at your desk.
  1. Light – Winter is a tough time to be working a lot, especially if it’s dark when you go to the office and it’s dark when you leave. Just as oxygen has been proven to stimulate brain activity, light can affect your mood, which influences your energy level. Take a moment to go outside and soak up the sun.
  2. Fuel – I can’t say “lay off the caffeine” without being a total hypocrite. Instead, I will suggest keeping an eye on how often you’re filling up that coffee mug, especially since it may mess with your sleep. Stay hydrated by drinking two glasses of water after each cup.

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7 ways women can advance their careers

Woman hula hoopWomen’s History Month is a great time to take inspiration from the achievements of outstanding women, and a chance to check in on your own goals. Are you aiming for advancement and trying to decide the best ways to get there? These are some steps you can take to enhance your prospects for getting ahead.

  1. Set yourself apart. What does your organization need? Someone to spearhead cybersecurity efforts or to develop a strategy for addressing the impact of blockchain technology? A professional with expertise or a strong interest in a new and promising service area? Becoming the go-to expert in a hot topic area can raise your visibility and put you in a better position to be considered for new roles or leadership opportunities.
  2. Get on track with mentoring. Need an objective source for advice and career insights? Be sure to take advantage of any mentoring options inside and outside your company (these free mentoring and networking resources will give you some pointers). Once you have some experience under your belt, it’s also a good idea to offer to become a mentor to a less seasoned professional. It can be a satisfying and educational experience. It also helps you learn and demonstrate leadership skills that will benefit you as you move up the management ladder.

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Lead with inspired authenticity: chuck the checklist and find your why

Paper cranes leadershipHave you ever made your own “leadership skills checklist”? If you have, it probably included things like “active listening,” “decisiveness,” “delegation,” and “motivation,” to name a few. As accountants, we love to create checklists that can get us to a well-defined outcome – so why would we treat our efforts to become great leaders any other way?

The thing is, if we are only checking off skills on a list, are we really developing into the best leader we can be?

I believe the answer is a resounding NO!

To become the best leader we can be, we have to get past our skills checklist and dig into who we are and what drives us. If we can stop worrying about checking off skills and instead focus on our true purpose, we can lead our teams with authenticity and inspiration.

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Nonprofit risk management 101

JengaNonprofit organizations are, by definition, on a mission. In pursuit of their missions, they may engage in risk-reward scenarios that for-profit businesses can’t afford to tackle. To further their cause, many nonprofit leaders accomplish more with less funding than seems possible. Unfortunately, limited resources create risk exposures. This may lead nonprofit management and boards to believe they can’t afford a risk management program. But they can’t afford not to.

Public trust is foundational to nonprofit organizations’ sustainability. Left unmanaged, risks can result in all sorts of losses: donors, employees, members, patrons and grants. Often, it’s not until a critical event occurs that risk management moves up the priority list.

In our experience (although risk management can seem overwhelming — especially for smaller organizations), it’s worth the time and resources.

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How your organization handles personal data is about to change

GDPRIf your organization or client handles personal data of any person residing in the European Union—even if the organization itself isn’t located there—pay attention. The way you store and manage that data may need to change significantly.

Enforcement of the EU General Data Protection Regulation (GDPR), which was ratified in 2016, will go into effect May 25, 2018. The GDPR was created to allow individuals to have greater control over their personal data and provide consistency across the EU member countries when it comes to data privacy rules. According to EUGDPR.org, personal data is defined as “any information related to a natural person or ‘Data Subject’ that can be used to directly or indirectly identify the person. It can be anything from a name, a photo, an email address, bank details, posts on social networking websites, medical information or a computer IP address.”

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4 new opportunities blockchain could create for auditors

Blockchain 2In case you haven’t heard, blockchain technology has the potential to change the auditing profession. A new whitepaper co-authored by the American Institute of CPAs details what opportunities could emerge for auditors.

Not sure what blockchain is? Don’t worry, you’re not alone. It’s a digital, distributed ledger that contains every transaction since its creation. Once transactions are entered, they can’t be changed or deleted. Every user on a blockchain has an identical version of the ledger, and all copies are updated automatically when a new transaction occurs. Each entry refers back to the previous entry across all versions, creating a “chain” of information.

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3 myths about tax extensions

Tax extensionSometimes filing a tax extension can be a benefit to your clients, but only if they are clear on what an extension means —and what it doesn’t mean.

If you’re a tax CPA, you’ve probably come across a client who chose not to file an extension because they misunderstood how it would affect them. On the other hand, maybe a client was happy to go on extension but for the wrong reasons.  

Below are three myths that your clients may have about extensions that you can proactively dispel.

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5 busy season food cravings and how to feed them properly

Ice creamSuddenly, in the middle of a client meeting or complicated tax return, you want — no, need — chocolate, or maybe French fries and fried chicken. There’s no doubt food cravings grow under stress. But they can also hit when we feel good or for seemingly no reason at all.

These guilty pleasures can be a great morale booster during busy season. Yet too much indulgence can lead to unhealthy weight, high blood pressure, type 2 diabetes and a host of other health problems! Cravings can’t be eliminated entirely but knowing your triggers and developing strategies for feeding them in healthier ways can help.

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3 ways new software enhances CPA exam experience

ManLookScreenIf you took the CPA exam any time before 2004, images of an arena or hotel ballroom and No. 2 pencils and scratch paper still hold a prominent place in your memories. For those of you who took the exam after the American Institute of CPA’s launch of computer-based testing in April 2004, it was a much different experience. This important move helped the AICPA become a model for high-stakes testing, known for our ability to manage, deliver and score exams faster and more efficiently for candidates. 

Since computerizing the exam, we’ve remained focused on our ability to provide the best possible test experience. Some recent projects include the exam’s move to a web-based application for better test delivery, as well as a new item type (Document Review Simulation) that offers a more realistic simulation experience. 

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4 steps to improve nonprofit functional expense reporting

Expense reportingCongress, the media, watchdog agencies and funders — almost everyone wants to know how nonprofits are using their scarce resources. They look at functional expenses to make that determination, so it’s important to present the most useful and transparent information possible.

To that end, FASB Accounting Standards Update (ASU) 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities, requires not-for-profit entities to disclose their expenses by both functional and natural classification in one location. This ASU gives you good reason and opportunity to review your current classifications to determine if any changes need to be made as you prepare for implementation. ASU 2016-14 is effective for fiscal years beginning after Dec. 15, 2017.

How often does your nonprofit review its functional expense classifications? For most, it’s been a while. The following will walk nonprofit professionals through that process.

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Tax pros: How are you protecting your clients’ data?

Cybersecurity

“I don’t need to worry about identity theft because no one wants to be me.”

-Jay London

American comedian Jay London is funny, but identity theft isn’t. Unfortunately, cybercriminals know that targeting tax professionals is more effective than going after individual taxpayers; after all, tax professionals keep records on hundreds, if not thousands of individuals. This means any firm could be a target this tax season.

The IRS receives three to five data theft reports a week from tax practitioners. And, as IRS Commissioner John Koskinen said last year, “These (cybercriminals) are well-funded, knowledgeable and creative. It’s going to take all of us working together to combat these identity thieves. But doing nothing or making a minimal effort is no longer an option. Anyone who handles taxpayer information has a legal responsibility to protect it.”

While this may not be the time of year to do a full assessment of data security and technology integrity, there are steps CPA firms should take now to keep their clients’ data safe:

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Empowering women to be financial powerhouses

Women financial planning

While preparing to host a webcast on women and money for a client company recently, I was asked why I thought we needed to have a separate webcast just for women – doesn't money work the same way for everyone?

The fact is that yes, money is money. But the way we relate to money, combined with differing life expectancies and career factors, means that we need to approach the "why" behind exercising healthy financial behaviors a little differently.

While everyone has questions about money, here are 3 common questions that I hear from women clients, and how I typically advise them to approach those concerns. What better day to think about this than on International Women’s Day?

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Calling all CPAs – you should run for office

ElectionYou know that feeling you get when you’ve helped a client in a concrete way? Perhaps you saved them money on their taxes, identified waste or even fraud. Maybe you designed a plan to take their children through higher education, helped them save for retirement or protect themselves from loss. Possibly you advised a small business startup, or helped a larger company report on their cybersecurity controls.

What if you could take that feeling — and your service — to the next level?

When you’re a CPA, you have a solid understanding of the many issues that power government: taxes, their assessment and collection and the rules that govern them; small business challenges and needs; financial literacy and responsibility; and myriad details of budgeting, responsible record keeping and the impacts of financial decisions.

CPAs’ expertise gives them a distinct advantage over other candidates, making them uniquely qualified to serve as thought leaders in government. As the country ponders the effects of the first major tax overhaul in more than 30 years, now more than ever, there’s a need for tax and fiscal expertise in our public servants. Who better to serve the community and protect the public interest than CPAs?

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Credit losses: May the force be with your mission to CECL

Second in a series on the Financial Accounting Standards Board’s (FASB’s) Current Expected Credit Loss standard

YodaAfter years of debate over the role fair value accounting may have played during the subprime mortgage crisis, accountants seek to apply FASB’s current expected credit loss (CECL) standard as a “force for good” in their depository institutions.

If this is your mission for a bank, thrift or credit union, you probably feel like Luke Skywalker. Ultimately you want to be Yoda — thoughtfully presenting the keys to unlocking a force for good that can strengthen your institution against the dark side of internal disarray and competitive challenges.

As with any mission, success starts with understanding your situation and the power of resources at your fingertips. If you’re still struggling to read and digest the standard, “Do. Or do not. There is no try.”

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Now accepting applications: 5 tips for mid-season hiring

Help wantedIt’s the middle of busy season, and you’ve just realized you could use a little more help. Maybe you underestimated your firm’s capacity, or a staff member unexpectedly needed to leave. When it’s all hands on deck to manage client needs, mid-season hiring is a curveball no firm wants to face. Here are a few ways to prevent such departures and prepare for the unexpected.

An ounce of prevention

Of course, one of the best ways to handle mid-season hiring is to prevent departures. 

While people will leave, and not always at the best time, a firm should try to create a fun office culture so employees won’t want to go anywhere else. This means creating a family-like atmosphere in hopes that staff members are less likely to leave “family” in the middle of a busy time. To make the firm more inviting, consider:

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Switching to a C corp? Think twice about it.

C corpMost people probably don't even know what toothpaste they buy; they just recognize the box on the shelf.

--Charles Duhigg

The recently enacted P.L. 115-97, known as the Tax Cuts and Jobs Act, will have a significant effect on tax planning for clients, but many CPAs are also investigating what it will mean to their own firms. Best to listen to the advice of American Pulitzer prize-winning reporter and best-selling author Charles Duhigg on the process; make sure you know what’s in the tax planning “box.”

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Forensic and valuation pros: 4 ways tax reform affects you

Tax reform 2Tax reform affects more than just taxes. It has lasting implication for all CPAs and introduces some uncertainty for financial forensics and business valuation. Depending on who your clients are, you may feel this more than other CPAs.

If you concentrate in estate and gift tax valuation, now is a good time to start looking outside those business models by leveraging the opportunities that have come up since the new law was signed.

In a recent interview, Don DeGrazia, CPA, ABV, CFF, partner with Gold Gerstein Group LLC, explained the P.L. 115-97, known as the Tax Cuts and Jobs Act, makes the federal estate tax temporarily go away for many tax payers. While state estate or inheritance taxes are still in effect, they don’t provide nearly the same volume of business.

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A behind-the-scenes look at the CPA Exam

Behind the scenesMost CPA Exam candidates can rest assured knowing the time and energy they’ve spent leading up to exam day has prepared them for what to expect. Reviewed content and structure, section by section in the Blueprints? Check. Practiced with the sample tests to learn the exam’s functionality? Check. Confirmed test windows, how scoring works and made that test day appointment? Check. Understood the importance of language in the exam and what goes into the wording of each question? Che...wait. What?

Understanding what goes into the development of exam questions may provide extra insight for test day when you sit for the exam, which surely adds to your confidence. Read on to explore some of the behind-the-scenes considerations from creation to approval, fairness in the wording, as well as knowing with certainty that each multiple-choice question has only one right answer.

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Start your audit off right with data analytics

When planning an audit, how do you approach your preliminary analytics? Many auditors perform a variance analysis. They compare current year account balances to the prior year to identify any unexpected fluctuations. While this procedure often yields relevant insights, did you know performing audit data analytics (ADAs) can be even more effective at identifying potential problem areas? ADAs can be quick and painless, and you probably already have the tools on hand to perform them.

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The one thing stopping you from making better decisions

Shutterstock_640007017
It’s been several years since your last dodgeball game in the high school gym, but you may remember it like it was yesterday. Nervous energy hangs in the air during those moments when the captains choose their teams. No one wants to be picked last.

Human nature is at play, compelling Captain Kim to choose Mark instead of you. Maybe it’s Mark’s athletic ability, or maybe it’s because he lives on Kim’s street and she is more familiar with him. Kim’s unconscious bias drives her toward one classmate over another. For the person whom Kim picks last, it might sting a little.


Without realizing it, every day in our professional lives, we make choices similar to Kim’s. It’s not always pleasant for everyone involved. All humans have a hardwired need to belong. If we don’t check our unconscious bias and unknowingly show favoritism, we risk alienating our colleagues and staff. That can affect engagement, productivity and team cohesion.


The good news is that you can train yourself to become mindful of your unconscious bias and strengthen your relationships in and out of the office. Try this practice I call the Three Rs.

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Engagement letter stories — when they hurt and when they worked

Engagement letterAs a risk management professional at CNA, professional liability insurance carrier for nearly 25,000 CPA firms, I am often asked if engagement letters are worth all the effort. The answer, based on my personal and CNA’s claim experience, is a resounding YES!

I’ve experienced firsthand the value these letters bring to the table. When an engagement letter is used, and a claim arises related to that engagement, the losses are typically less severe (meaning less expensive) than if an engagement letter had not been used. But what means more (especially to a CPA) than more money in your pocket? Many professional liability insurance carriers provide premium credits or other benefits for firms that use engagement letters.

If it’s not enough to just trust the numbers, consider the following experiences of CPA firms that have or have not used engagement letters.

One that hurt — no engagement letter meant higher risk

A CPA was engaged to prepare income tax returns for a small business and its owner for many years. The owner regularly spoke with the CPA about his plans to sell the business and ultimately retire. One day, the client did just that and moved away.

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Blockchain was made to solve 1 problem. Here’s what that is.

Blockchain“Blockchain is a solution looking for a problem. Unless you want to buy drugs on the internet,” said the instructor in a technology training I recently attended.

While not the first time I had heard such a comment, it was disturbing that a hundred of my fellow practitioners were being misled. Ignoring or dismissing blockchain does the accounting profession no favors. Instead, let’s consider the problem that the technology solves. This will provide a basis for later understanding possible applications to our work.

 What is the problem blockchain is trying to solve?

Blockchain, or distributed ledger technology, set out to solve how we transfer a digital asset between two peers without an intermediary. While there are many applications of this transfer, let’s look at it in the context of money.

Imagine you are selling a bike online. You don’t actually know the person who is buying your bike, so you have no way of knowing if the buyer actually has the money to pay for it. You have to trust an intermediary like PayPal for this information. PayPal is crucial to the transaction because it verifies what you cannot – whether the buyer has enough money in their bank account to make the purchase.

The asymmetry of trust in this transaction is known as the Byzantine General’s Problem. Imagine we have four generals planning to attack a city. At least three of the generals must attack at the same time to overpower the army holding the city. However, the only way they can communicate with each other is via messenger, and they do not know if one of the generals is a traitor. If a general were traitorous, he could modify the attack message and cause the other generals to fail. The only way to overcome a traitorous general is to provide the history of all messages sent and evidence they have not been altered. If the generals see that one of their peers has sent a message different from the others, they would know the general is traitorous and disregard his message. If more generals are good actors than bad in this attack, the correct message will be obvious.

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10 tips to tackle the CPA Exam during busy season

Busy season juggling If your time already seems extra valuable during busy season, try studying for the CPA Exam at the same time. Many do it, however, as they power forward to earn a credential that will significantly enhance their professional lives. If you’re about to jump into juggling the demands of busy season and test preparation, here are a few tips from CPAs I talked to who’ve been there, done that and earned their CPA.

  1. Plan your time.

CPA Leighton Smith, who is a finance director at Microsoft, calculated the time he thought he’d need to study each quarter. He then tracked his actual weekly progress and made adjustments as needed. “I didn’t want to leave anything to chance,” he says.

  1. Stretch the workday.

To keep on track, you’ll have to wake up early, get to bed late and study on the go. “When I took the metro to work in the morning, instead of reading or listening to music, I worked with flash cards that I had made the night before based on my reading,” says CPA Jeff Wilson, advanced QuickBook ProAdvisor at The W2 Group, LLC. During his 30-minute commute each way every day, CPA Caleb Bullock, business development manager at Somerset CPAs and Advisors, listened to lectures. “I did it every spare minute,” he says.

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10 busy-season exercises CPAs can do at their desks

Busy season means tough choices—dividing daily life into essentials and non-essentials. Food: essential. Sleep: essential. You know exercise is important, but is it essential? Research shows that completely dropping your exercise routine for just a few weeks can put you at increased risk for a heart attack or stroke. But findings also show that even short periods of exercise can reduce those risks while boosting productivity and reducing stress. But how? If you don’t have time for a full routine at the gym or outside, deskercise!

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Social security benefits hacked: A cautionary tale

Social Security hackIf you or your clients are at or nearing retirement age, you need to know that hackers are targeting social security accounts. I found out the hard way. My career as a CPA Personal Financial Specialist was devoted to advising individuals and families on their most important financial goals, including tax, retirement, estate, risk management, investment and retirement planning. After decades of helping my clients navigate and manage these important decisions, imagine my surprise when I received a letter in the mail shortly after my 67th birthday congratulating me on initiating my Social Security benefits. The trouble was, although I had entered the glory years of retirement, I had not yet applied for Social Security benefits, opting to wait until age 70 to receive my benefits. Further digging uncovered the unfortunate fact that a thief had received $19,236 of my benefits. I was dumbfounded.

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Personal financial satisfaction extends record run…but for how long?

Americans are experiencing unprecedented levels of personal financial satisfaction, the highest in the 24-year history of the AICPA’s Personal Financial Satisfaction Index (PFSi). After seven consecutive quarters on the rise and a second quarter in a row setting at an all-time record, the average Americans’ personal financial satisfaction has been steadily picking up steam. With financial satisfaction climbing to new highs, some can’t help but wonder when this rise will end.

First, some background. The PFSi is a quarterly economic indicator that measures the financial standing of the average American. It’s calculated as the difference between two sub-indexes: The Personal Financial Pleasure Index, which measures the growth of assets and opportunities, and the Personal Financial Pain Index, which calculates the loss of assets and opportunities. The Pleasure Index is made up of four factors, the largest contributor being the PFS 750 Market index. The Pain Index is also comprised of four factors, with the largest contributor being personal taxes. Most recently, the Pleasure Index (69.2) greatly outweighed the Pain Index (42.3) bringing the PFSi to a positive reading of 26.9, the highest reading since 1994.
 


AICPA Q4 PFSi

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New AICPA chair shares his vision for the future

ERIC HANSEN HEADSHOT Today, Eric Hansen, CPA, CGMA, assumes his new role as Chair of the American Institute of CPAs. We sat down with Eric to ask the four questions that will help you know him and his vision for the profession a little better.

You can also watch the video of his inaugural address, delivered to members of AICPA Council, here.

  1. Congratulations on becoming the 105th Chair of the AICPA! How would you define your role as a leader in the accounting profession?

I’m so humbled and honored to join the ranks of so many amazing and visionary leaders who’ve come before me. They are the reason for our success today. And I see it as my duty – and really that of all accountants – to continue to build on that success, keeping the profession strong and maintaining our critical role in protecting the public interest.  

  1. Strong positioning seems especially important now, as we navigate a world defined by rapid change and disruption. So, how do we keep the profession relevant and trusted?

One thing many people may not know about me is that I’m an Eagle Scout. And it was during my time in the Scouts that I learned one of my favorite sayings: “If you’re early, you’re on time. If you’re on time, you’re late. And if you’re late, forget about it.” This is how I’ve approached my life and career, and it’s never failed me.

This is how we need to think about our profession, as well. No one knows for sure what tomorrow will bring. But, if we have the courage to be bold and a bias for action, we’ll be prepared.

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Busy season cheat sheet: 8 considerations to make it easier

Busy season finish lineTime is always a precious commodity during tax season, but especially so this year. On top of starting to prepare 2017 tax year returns, CPAs are working to figure out exactly how the tax reform law affects clients.

Before you start pulling your hair out, take a deep breath and remember the wise words of Eleanor Roosevelt: “This too shall pass.” Then, check out the AICPA resources that not only make preparation a bit more convenient, but will also help you impress your clients by answering their questions before they even ask them.

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Take a timeout: 9 do’s and don’ts for a good work break

Take a breakYour neck and back ache from hunching over your desk. Your eyes burn from staring at a monitor. You don’t want to stop because the clock is not your friend today. Yet stopping can, in fact, make the clock your friend. 

Taking a break on the busiest of days (and, of course, this is the busiest of seasons for tax CPAs) can be hard to do. I get it – while working on a deadline, I hyper focus and hate to put myself on pause. But I make myself do it because I know from experience that it will ultimately lead to greater productivity.

You don’t have to take my word for it, science says the same thing. Consultants monitored people’s productivity using an application called DeskTime and found that the best performers worked for 52 consecutive minutes followed by a 17-minute break. Not too surprising, considering that scientists have learned that our brains are better at solving complex problems when given a chance to relax. Think of that “aha” moment that comes to you when you’re in the shower or picking up dry cleaning. 

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5 items you need in your firm’s owners’ agreement

OwnershipWhat’s in your owners’ agreement? I recommend creating these critical documents when the firm is first formed and updating them as needed. An effective agreement can enhance decision-making and productivity, and it’s also the foundation for a successful changeover to new internal ownership. Even in a merger or acquisition, the decisions set forth in an owners’ agreement can set the stage for a smoother and more rewarding transition. Here are some significant issues that should be addressed in any agreement.

Firm governance. When you establish policies on who will run the organization and how it will be run, it can enhance efficiency and profitability. No matter how independently each partner may handle his or her work, there are many advantages to having common agreement on some key issues, such as:

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Government shutdown: What you really don't want to see during busy season

Government shutdown

The primary function of the government is - and here I am quoting directly from the U.S. Constitution - 'to spew out paper.'

-Dave Barry

Humorist Dave Barry can be quite silly, but it’s not so funny when faced with a government shutdown like the one that took place October 1-17, 2013. That was the last one before the shutdown that took place Friday at midnight. In 2013, government operations resumed after a continuing resolution, or CR, was signed into law.  And sometimes, well, we just “need that paper.”

Since accountants like to talk numbers, the 2013 16-day shutdown was the third-longest government shutdown in U.S. history. It trails behind an 18-day shutdown in 1978 and a 21-day shutdown 1995-96.

Monday, Congress voted to approve a temporary funding bill – the fourth since September – effectively reopening the government. But it’s a stopgap measure. And it’s possible we’ll see another shutdown on February 8. This is a critical time for CPAs who’ll be in the midst of filing season.

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5 things I wish I knew when selecting an ERP system

ERPAccounting professionals in the not-for-profit sector wear many hats. We often have the blessing and curse of selecting and implementing enterprise resource planning (ERP) systems. If you have undertaken this herculean effort before, you’ll probably never forget the education you gained throughout the experience. If you haven’t had the opportunity yet, there are some things you should consider to help your not-for-profit or your not-for-profit clients avoid mistakes. Here are five key lessons I learned when selecting an ERP system for my organization.

  1. You get what you ask for. It’s important to be specific about what you want to do and how you want to do it so you can find out if vendors can accommodate your needs. If the business requirements you specify are too generic, you may be surprised to discover significant gaps in the system’s capabilities too late in the game. For example, saying you need the ability to make electronic payments may be too generic. Instead, indicate that you need the ability to automate batches of electronic payments via EFT and wire. In this example, the added clarity ensures the system can not only make electronic payments but also process them via EFT, and that payments may be initiated through automatic batches rather than manually, one by one.

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Reflecting MLK’s work in the fabric of the profession

MLKToday is the federal holiday when we commemorate Dr. Martin Luther King Jr.’s life and extraordinary work.

Just shy of fifty years since his assassination, we have undoubtedly made progress. However, we still face an unsettling reality where disrespectful language, aggressive rhetoric and harassing behavior continues in some corners of our society.

To advance successfully together, we must face these facts with courage and uphold Dr. King’s legacy to support respect and inclusion. Of the voices carrying his mantle, Dr. King would be proudest to know that ordinary people are increasingly empowered to echo his original messages of equality and justice. In 2017, we heard from a diverse chorus of voices in entertainment, sports, business and politics as well as our neighbors and friends.

The AICPA is committed to inclusion in the accounting profession as well as within our organization. We rely on each individual (member and employee) and their unique views of the world to make the profession stronger and better prepared for the future. We also rely on respect and equality to bolster us against any negative pressure we face as citizens in our communities.  

We thank the members of the our National Commission on Diversity and Inclusion for their dedication and leadership in guiding the profession through our journey of inclusion. And we salute the many accountants and students across the world who are advocates of inclusion.

May you take this day an opportunity to not only celebrate the legacy of Dr. King, but to begin to create legacies of your own so that in 50 years you too are celebrating standing up for change.

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Today’s most binge-worthy TV, brought to you by inclusion

BlackishHopefully you were able to slow down long enough over the holidays to catch up on some of today’s most popular shows. If you’re like me, you want to see interesting shows representing a wide spectrum of perspectives and experiences. With the growth of cable networks and streaming services, you can find shows featuring a range of ethnicities, races, sexuality, and abilities, making for much more engaging and enlightening content.

But inclusion in entertainment didn’t happen overnight. Digital entertainment companies like Amazon, Netflix, Hulu and HBO (just to name a few) have been challenging the network television status quo for nearly a decade by assembling writers, producers and actors from various backgrounds to create fresh content. The networks are answering and keeping themselves relevant with their own solid offerings. Today’s improved TV proves that business’ most innovative offerings are spurred on by inclusion as well as competition.

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3 things more important than tax reform in 2018

Your phone’s already ringing. Clients want to know how the new tax law will impact them. This is understandable, but don’t Small firm prioritiesworry if you aren’t ready to answer their questions just yet It’s a big law and the IRS has yet to provide even the most basic guidance. For most businesses, taxes aren’t the first thing to look at in 2018—in fact, taxes probably shouldn’t be your clients’ second or even third priority. During your client meetings consider tackling these other issues that haven’t made the 6 o’clock news.

  1. Everybody needs to fully reevaluate their accounting.

To start with, after two years of delays, US GAAP is undergoing its biggest changes in decades with implementation of FASB’s new revenue recognition and lease accounting standards. Aside from the high-profile changes for software providers, virtually every business in America that reports under US GAAP will see significant changes to their accounting for revenue recognition. Most of these businesses have leases to look at too.

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Selling your practice? Don’t forget to cover your tail

Tail insuranceDon’t let this be you: You sell your practice and all is going well. You are enjoying retired life— when all of the sudden you get a call from your practice’s new owner. A previous client is suing you and you aren’t covered. Yes, this sounds like a nightmare, but luckily it doesn’t have to be your reality. Before selling your firm, protect yourself by considering the following.  

  1. Be Aware of the Danger

When you sell or merge your practice, the potential liability claims don’t go away. Instead, they could move forward into the new firm, ready to erupt when you least expect it. Even if you simply shut down your firm, the possible claims don’t disappear. They can follow you into retirement.

  1. Understand the Limitations

The professional liability insurance you buy is typically issued on a “claims-made and reported” basis. In other words, it is good for claims that are made only while the policy is active. For example, let’s say you sell your practice to Sue’s firm as of January 1, 2018. Early in 2019, an old client makes a claim against services you performed in 2017. The claim may not be covered under Sue’s current professional liability policy, and your policy expired when you sold the firm. You and Sue may be now potentially faced with a claim that is not covered by insurance.

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What’s the price tag on your college football team?

FootballThe stage is set. Who will be crowned the 2018 College Football National Champion tonight? Georgia and Alabama, the teams left standing in the playoffs, will face off to decide. The game is expected to draw a huge viewing audience. Last year’s title game between Clemson and Alabama – the Crimson Tide is back for a third straight year – pulled in more than 26 million viewers.

It’s no secret college football is big business. There’s been a long-time debate about whether student-athletes should get some of the profits (this blog post won’t go down that road). But how do you put a price tag on a team?

Having fans throughout the country focused on top-ranked teams during the season can really boost a university’s brand. A winning football program can lead to a university’s higher student enrollment, better alumni engagement, more scholarships, high-profile donors and increased visitor spending in the community on gamedays.

So, which college football program has the highest net worth? According to a 2017 analysis, Ohio State. The program has a $1.5 billion value, a 50% jump just from the previous year. The increase perhaps because of the Buckeyes’ 2015 national championship win. Texas and Oklahoma trail Ohio State valued at $1.2 and $1 billion, respectively.

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7 proposed changes to the auditor’s report

Auditor's reportAn auditor’s report gives lenders confidence that financial statements are free of material misstatement. But does the auditor’s report really tell the story of what the auditor did to gain assurance about the financial statements? Thanks to proposed changes to the auditor’s report, readers will gain a better understanding of what the auditor did and observed.

The AICPA Auditing Standards Board (ASB) has released a set of exposure drafts  aimed at enhancing the relevance and usefulness of the auditor’s report.

  1. Proposed Statements on Auditing Standards: Auditor Reporting and Proposed Amendments―Addressing Disclosures in the Audit of Financial Statements
  2. Proposed Statement on Auditing Standards: The Auditor’s Responsibilities Relating to Other Information Included in Annual Reports
  3. Proposed Statement on Auditing Standards: Omnibus Statement on Auditing Standards—2018

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Next step for tax reform: Busy season

Tax reformTax reform is now law.

A few weeks ago, Congress passed H.R.1, a tax reform bill known as the Tax Cuts and Jobs Act. Its full title is “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018.” On Dec. 22, President Trump signed the bill into law.

As busy season approaches, it’s important that CPAs are aware of how this bill affects their clients. Some provisions apply retroactively, including reducing the threshold for deduction of medical expenses from 10% to 7.5% of adjusted gross income (AGI) for a two-year period beginning in 2017. This means some clients may be able to deduct more from their 2017 taxes or qualify for the deduction for the first time.

Individual tax rates changed, effective 2018-2025 tax years. These are now set at 10%, 12%, 22%, 24%, 32%, 35% and 37%. The IRS will issue guidance soon, meaning we could see changes to paychecks as early as next month. Business clients could also see their tax rate lower with the new flat 21% corporate tax rate. Previously the corporate rates ranged from 15% to 38% and were graduated based on taxable income.

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AICPA announces 2018 CPA Exam score release dates

The 2018 score release dates are posted to the Score Release Timeline page of the AICPA’s CPA Examination page. For complete information regarding scoring, please visit the Examination Scoring and Scoring FAQ pages.

The National Association of State Boards of Accountancy will release scores to boards of accountancy based upon the target score release dates listed in the tables below. Some boards may require at least one day beyond the published target release date in the table to process and release scores.

Note: There are score holds for the 2018 Q2, Q3 and Q4 testing windows. For more information about these score holds, please read the specific Scoring FAQs.

2018 Q1

*The Exam data files the AICPA receives after March 11 will be included in the final target score release date.

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Why you shouldn’t make a New Year’s resolution

ResolutionsEach year, millions of Americans lose an average of 20 pounds and learn a new language within a few months of making their New Year’s resolutions.

Wait, what? That’s not actually true. I can tell you what really happens: Every January 2, a slew of people show up at my gym and hog the treadmills. It is rather frustrating. Luckily, I know they’ll be gone in a few weeks. That’s because they are part of the 80% of Americans who abandon their resolutions by the second week of February.

There has to be a better way. What if instead, we set goals throughout the year, rather than all at once when the clock strikes midnight? We would be less likely to feel overwhelmed by our commitment to training for a marathon and writing a novel, so we’d have a better chance of getting something done. After doing some research, I found a few other tips to achieve those goals you set.

Be specific. Begin by writing down exactly what you want. We’d all like to be more successful or more fulfilled, but what exactly does that mean to you? Let’s say you’d like to raise your professional visibility. There are a number of ways you can do it, including getting further training that can make you more valuable to clients or your employers or becoming more involved in professional or community organizations. And remember this isn’t a once-a-year activity, since it’s good to set new goals as circumstances change and new opportunities pop up.

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