Recipe for a Delicious Holiday, AICPA Style

Crumb cakeThanksgiving, Christmas, Hanukkah, Kwanzaa, New Years. Late fall and early winter are choc-a-bloc with holidays and, thus, opportunities to entertain and cook for friends and family. Some people like to stick with their tried and true holiday recipes year after year. Others are always looking for something new to serve. And if you've been invited somewhere as a guest, you might be looking for just the right thing to bring to a party or holiday gathering.

AICPA staff and affiliates gathered some favorite recipes from aunts, uncles, or in my case, my second grade class in elementary school. We hope this collection of old favorites is helpful—and tasty. And as one colleague suggested, if toiling in the kitchen isn't your thing, you can always make reservations!

Happy Holidays!

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4 Critical Reasons Startups and Smaller Organizations Need Internal Control

Shutterstock_218755333I often hear from practitioners that many of their small business and startup clients lack an adequate and effective system of internal control. In fact, the Association of Certified Fraud Examiners’ recent Report of the Nations on Occupational Fraud and Abuse found that small organizations implemented anti-fraud controls much more sparingly than larger organizations. Additionally, the report found that the median loss incurred by small and large organizations due to fraud was the same, but that the impact on smaller organizations was much greater due to their smaller size. Since small companies such as startups are often hit hardest by fraud, it is critical that they develop adequate anti-fraud controls at their organizations. Outlined below are a few of the many significant benefits of a strong internal control system.

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6 Ways to Ease Audit Workload Compression during Busy Season

Shutterstock_270607559With the start of busy season just around the corner, planning is on most practitioners’ minds. I have recently spoken with many professionals about ways they jumpstart their upcoming audits. Outlined below are some activities to begin now that will make your busy season a little less hectic.  

Ask your clients to fill out background information forms. If there have been changes to their management, ownership structure or board of directors, ask clients to document them before busy season begins. Also, if your client has entered a new market, they should note these changes as well. You can provide your clients with the prior year documentation and transfer information to the new form as soon as it is available.

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Thank a Veteran Today, Help Veterans Year Round

American Flag

It is relatively easy to take time out of your day to acknowledge our veterans—in person or on social media—and say thanks to those who bravely and proudly served our nation. There are some CPAs who have found ways to give even more to our veterans. AICPA Insights recently spoke with former AICPA Chairman Ernie Almonte, CPA, CGMA, who has volunteered extensively with Operation Stand Down Rhode Island, a veteran’s organization in his home state of Rhode Island, about his experiences.

AICPA Insights: Why did you get involved in working with veterans?

Ernie Almonte: I have always been interested in history.  The more I learned about history the more I realized the important role veterans play in our freedom. As a participant of the Marine Corps ROTC program in high school, as a son of a U.S. Marine veteran from the Korean War and a member of a family that has lost relatives and friends in various wars fighting for our freedom, I felt an overwhelming need to give back.

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Top 3 Takeaways on FASB’s New Not-for-Profit Standard


Shutterstock_276224309Are you nervous about implementing the Financial Accounting Standards Board’s new not-for-profit standard? At 270 pages in length, it is understandable that one would find it daunting and would be unsure of where to begin. Even though the standard does not go into effect until 2018 for most not-for-profits, you and your clients need to be thinking about the standard and your implementation plan now.

To start my education, I reviewed this AICPA Insights blog post from FASB member Larry Smith that provides an overview of the new standard. I also recently attended the webcast, “Applying FASB’s New Not-for-Profit Financial Statement Standard,” which was hosted by the AICPA’s Not-for-Profit Section team. I learned some practical tips and received information I can share with my clients.

Here were my top three takeaways from an implementation perspective:

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An Election Like No Other

Election 2016“What do you make of the presidential campaign, Barry?” That’s the question I'm often asked by fellow CPAs and CGMA designation holders.

I have a simple refrain: It is an election like no other. And it may well matter more than any U.S. election before it for one reason. It comes at a time when the country is the most polarized it’s been in modern political history. People on both sides of the ideological spectrum feel distrust and anger at large institutions and government officials. So it’s fair to wonder if the new President and new Congress will choose to build bridges—or burn them. 

Regardless of your own political preferences, the outcome is likely to have a significant bearing on the accounting profession in the U.S. and beyond, our advocacy agenda, and our ability to shape legislation and regulation for at least the next four years.

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5 Essential Controls for Charities during the Holiday Giving Season

Shutterstock_395826034For not-for-profit leaders, strong controls for fraud are especially important during this time of year. The unofficial kickoff of the charitable giving season occurs on Giving Tuesday, which takes place the Tuesday following Thanksgiving, Black Friday and Cyber Monday here in the United States. In my state, Minnesota, we have a “Give to the Max Day” to encourage giving to nonprofits and schools before Thanksgiving.  A 2015 Charitable Giving Report produced by Blackbaud noted that of the not-for-profits surveyed, 17% of their contributions were received in December.  

Here are five things small organizations can do to protect themselves and ensure that the influx of contributions received this holiday season support programs, not fraudsters:

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5 Scary Tax Characters to Watch Out For

ZombieHalloween is my favorite holiday, bar none. Once a year, we all have license to use our imagination and be someone or something else. And beyond the goblins, pumpkins, ghosts and black cats, there is the absurd amount of candy floating around the stores and office. 

The late Vincent Price, an actor who unquestionably had the best horror movie voice in the world, said, “It’s as much fun to scare as to be scared.” Vincent, wherever he is, may be pleased to know something can spook the unwary taxpayer in the same way his voice could invoke fear and trembling: tax creatures like the ones listed below. The good news is that you can avoid or at least minimize these horrors if you start thinking about these things now.

  • Count AMT (aka Line 45 on Form 1040) – Dracula could not have devised a better way to suck the money or refund out of your life than the alternative minimum tax. If your income reaches a certain amount, you must recalculate the tax you owe based on a higher income, one that does not have some of the deductions that helped to lower it. Devised as a tool to ensure that wealthy taxpayers could not use loopholes to avoid paying taxes entirely, the AMT now preys on taxpayers who are not so wealthy. The current AMT exemption is $59,900 for single taxpayers and $83,800 for joint filers. Talk to your CPA about ways to soften the impact and be aware that certain deductions act as triggers for the AMT.

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CPAs with Clients in the Marijuana Industry Need to Consider Risks

MarijuanaOn Nov. 8, voters in nine states will consider ballot initiatives to legalize marijuana – a move that could create new businesses that will need CPA services. However, conflicting federal and state laws mean that CPAs have to carefully consider the risks of providing services to these businesses. The AICPA spoke with Stan Sterna, vice president for Aon Insurance Services, the national administrator of the AICPA Professional Liability Insurance Program, and Mike Komoll, assistant vice president of professional service claims for CNA, the underwriter of the AICPA Program, to discuss key considerations for CPAs providing services to the expanding marijuana industry.

Which states are considering legalizing marijuana in November, and why might CPAs be interested?

Sterna: Five states – Arizona, California, Maine, Massachusetts and Nevada – will vote whether or not to legalize recreational marijuana, while four states – Arkansas, Florida, Montana and North Dakota – will consider legalizing medicinal marijuana. In the 26 states and jurisdictions where marijuana is already sold legally, businesses in this industry have increasingly sought out accounting and tax services. CPAs in any states that pass marijuana initiatives next week will likely start seeing similar requests, which makes sense when you consider the size of the industry.

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3 Potential Financial Reporting Errors Found at Not-for-Profit Organizations

Shutterstock_388167307As a CPA who has been in public practice for many years, I know the challenges that not-for-profit organizations face in financial reporting, and, more specifically, in applying generally accepted accounting principles.

Financial statements provide a compelling picture of the not-for-profit entity’s activities. However, in my experience, there are potential financial reporting concerns not-for-profit organizations need to be aware of to make sure that picture is conveyed properly. Here are three errors that come to mind.

  1. Gross Reporting of Revenues and Expenses Related to Fund-Raising Activities.

GAAP generally requires that an organization report gross amounts of revenues and expenses in its statement of activities. However, there are situations where the not-for-profit may receive proceeds from fundraising activities net of related fees. In these instances, the entity would not report the net amount as contribution revenue; rather, the amount of the donor’s contribution would be reported as contribution revenue, and the fees would be reported as fundraising expenses. Consider the following:

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Tax Due-Diligence Checklist for Sharing-Economy Clients

UberPeople have been sharing services and property, and generating money from it, for years. For example, someone with a spare bedroom might have posted a note on a bulletin board at the local grocery store or advertised in the local paper to find a tenant. But do we understand the tax implications of the shared economy? That’s where CPAs come in.

Today’s technology allows for easier publishing and access to a wider pool of people for matching offers and acceptances. Using Airbnb or similar sharing websites, the owner with a spare bedroom will find that short-term rentals are relatively simple to arrange. Yet that same owner is unlikely to know the full tax consequences of this convenient rental, so it will be up to the tax preparer to ask the right questions.

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Why CPAs Should Learn about Integrated Reporting

Shutterstock_217047778Integrated reporting <IR> is receiving a growing amount of coverage worldwide lately, from both academics and from the accounting profession, and this trend shows no sign of slowing down. Books, research articles, presentations and other publications that highlight the potential opportunities of integrated reporting are becoming commonplace. The International Integrated Reporting Council has developed a plethora of resources including case studies and reports that provide a solid introduction to this topic. But a fundamental question remains unanswered. In terms of day-to-day implementation and data that can be acted upon, what exactly is an integrated report, and what does it mean for the CPA profession?


What is it?

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Four Steps to a Happier, Successful “Business” Retirement


Shutterstock_339672998As CPA financial planners and advisers, we spend a considerable amount of time addressing the technical aspects of IRAs, 401ks and defined benefit plans. We work to convert enterprise value into retirement assets. We consider diversification, funding strategies and tax implications.

Those issues are important, but it can be the personal and emotional aspects of helping your clients retire from their businesses that set you apart from other planners. Here are four critical steps to help you be a better partner to your clients who own a business.

Step One: Adjust the Conversation

The first step, and for many retirees the hardest one, is the mental adjustment of retiring after decades building a business and creating value. Then, one day, they sign a contract and turn those work responsibilities over to others.

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3 Steps to Mitigate and Respond to a Security Breach in the Cloud

The AICPA is participating in National Cybersecurity Awareness Month with a series of blog posts to help CPAs understand the role they can play in addressing cybersecurity issues. This is our second post in this series. Our first post discussed low- and no-cost ways to protect data.

Cloud securityMuch like their counterparts who run growing companies in virtually every industry, many accounting firm executives have their heads in the cloud. They have implemented, or are considering, cloud computing options for everything from data storage and networking to task automation and product delivery. Some firm executives see an additional opportunity: offering consulting services to help clients understand and use the cloud.

It’s clear that cloud computing provides proven advantages over on-premises options, such as savings, convenience and flexibility. However, the cloud also presents some unique challenges, including often complex deployment options, operational issues and substantial security concerns. Below you’ll find three steps to take to address cloud computing security.

Step One: Know the Risks

The first way to mitigate a security breach is to understand and prioritize the risks related to using cloud services. For accounting firms and their clients that use a cloud service provider (CSP), cloud-based solutions present the same risks as traditional information security, plus the risks associated with managing and governing a third-party service provider.

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5 Tips for Becoming a Firm of the Future

Shutterstock_362297912 (1)Here’s a familiar scenario: A firm has been in business for decades, achieving success using a tried-and-true formula of providing high-quality work and great client service. As a new generation takes over and market demands change, however, the firm’s partners begin to wonder how they can grow the practice while maintaining the winning attributes that have made the firm what it is. They worry a major change will distract their team from the important business of serving clients—and eat up too much time and money.

That’s the situation my firm faced about five years ago. As the recession was coming to an end, the firm, which has been in business roughly 70 years, had about 25 people and around $3.5 million in revenues. Our culture had long been to work hard and play hard. We’ve held on to the spirit of camaraderie and the family environment our founders built, but as we moved forward into the millennium we hadn’t developed the internal structures we would need to manage growth. However, by making some strategic decisions, over the course of five years we have grown to a firm of 35 people and $5 million in revenues.

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It’s a Great Day to Be a CPA!

Christen_Tim_headshot_As someone who grew up in the small farming town of Belmont, Wisconsin, the past year has been remarkable for me. I’ve visited more than half the states and met thousands of CPAs working in every professional accounting role you can imagine. And I’ve learned something from every one of them.

There’s nothing like talking with CPAs working with or in real businesses facing complex accounting and tax issues to understand what is important to the future of our profession. They understand we need to evolve to maintain our relevance. The confluence of complexity and rapidly evolving technology has accentuated the imperative for change.

We often discuss the four areas I spoke about at my inaugural address last October. CPAs want to modernize their services, which means adopting new technologies and being a step ahead of what the marketplace demands. They’re asking about everything from how auditors can leverage data analytics, to the latest standards from the Financial Accounting Standards Board and the impact Brexit will have on the work they do.

Something else they want to talk about, and the second area where we can shape our own future and ensure relevance, involves the speed in which we are developing new fields of expertise. These efforts are in response to the changing needs and requirements of our clients and employers. Today the world moves too fast to wait.

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5 Low- or No-Cost Ways for CPAs to Help Slam the Door on Cybercriminals

CybercrimeThe AICPA is participating in National Cybersecurity Awareness Month with a series of blog posts to help CPAs understand the role they can play in addressing cybersecurity issues. This is our first post in this series.

October is National Cybersecurity Awareness Month, but fighting cybercrime is a year-round battle. As experienced keepers of confidential information, CPAs are uniquely positioned to support cybersecurity initiatives for their firms, clients, or employers. But cybersecurity is costly, and budgets are always limited, especially in the public and not-for-profit sectors. Consider these five simple steps CPAs can take to help protect data without breaking the bank.

  1. Know email scams and warn others. People are increasingly the weak link in organizations’ cyber armor. You know not to give your checking account info to an unknown foreign government dignitary. But what if you get an email from your CEO instructing you to wire funds for a deal that you know is about to close? This scenario was all too real last year for a finance employee who was tricked into wiring $730,000 to a bank in China, according to an FBI report. Since the FBI started tracking business e-mail scams in late 2013, it has compiled statistics on more than 7,000 U.S. companies that were targeted. Total losses exceeded $740 million.

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3 Steps to a Secure Financial Future for Your Divorcing Clients

DivorceAnyone who has ever been through, or witnessed, a divorce knows that the pain of separating isn’t just emotional—it’s also financial. CPA financial planners may often feel at a loss as to what advice or guidance to offer distraught clients.

Let’s say your client Kate, age 50, calls in tears to tell you that her husband of 25 years, a high-level executive, wants a divorce.

“He wants to avoid using attorneys,” she says. “He made me an offer yesterday: He keeps all his retirement savings and I keep mine. I get the ski lodge; he gets the apartment in the city. We split cash and investments. I really don’t want to make him angry, but my own retirement will be so small. Is his offer enough?”

We all want what’s best for our clients and answering this complicated question will take some research. However, the most important factor is to avoid any conflict of interest. If you were advising the couple before the split, you may need a disclosure, a waiver or even a new engagement letter.

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How Not-for-Profits Can Share Risks and Reap Benefits through Collaboration

Shutterstock_283656011We are all here on earth to help others; what on earth the others are here for I don't know.” - W. H. Auden

I’ve spent most of my career in business development and have worked with organizations of all shapes and sizes, both for-profit and not-for-profit. From this vantage point, I’ve observed that leaders of social- impact organizations tend to be risk averse. This is because they feel pressure to maximize their time and resources on achieving the immediate needs of program service delivery. Often this pressure is increased when funders restrict resources to specific short-term projects.

In business, as in philanthropy, it takes long-term planning, time and resources to identify prospective partners and find mutual goals. There is an element of risk involved in sharing information and undertaking new business strategies together. One way that I like to describe strategic partnerships is by comparing them to a seesaw.  Participating organizations strive to balance the four R’s: Reach, Resources, Revenue and Risk.

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5 Ways to Make the Most of Mentoring

Shutterstock_341095673A successful mentoring relationship, like all relationships in life, is about give and take. But in order to be successful, both mentor and mentee need to give genuine input. It isn’t as simple as the mentor giving and the mentee taking. Considering the value of mentoring, what can mentees do to guarantee they’re getting the greatest advantage from the relationship?

Be sure to opt in. Everyone’s schedule is busy, and mentoring may seem like something that’s easy to delete from a crowded calendar. It’s a mistake to underestimate the importance of support, however. Among other things, a mentor can help you assess your priorities, which can ensure your time is spent wisely and more productively.

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Introducing a New Framework for Reporting on Cybersecurity Risk Management

Cybersecurity 2The list of companies is growing. Businesses, organizations and governmental entities have suffered damaging publicity—and faced lawsuits—due to data breaches, forcing them to make cybersecurity a priority. It’s not surprising to hear, then, that 95% of CGMA designation holders said their companies were concerned about cyberattacks, according to an AICPA survey. Organizations and their stakeholders are not only seeking ways to address current and potential threats but also to gain assurance and communicate about the efficacy of their own efforts to identify and manage the potential effects of cybersecurity risks.

Stepping up to help our fellow CPAs meet businesses’ and clients’ needs, the AICPA is proposing a way for businesses to demonstrate due care and build stakeholder confidence in their cybersecurity risk management efforts. The Cybersecurity Working Group of the AICPA’s Assurance Services Executive Committee (ASEC), in collaboration with the AICPA’s Auditing Standards Board, is developing criteria and guidance that companies can use to communicate, and we can use to report on entity cybersecurity risk management efforts.

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3 Steps to Maintain Independence When Preparing Financial Statements

Shutterstock_302730485Consider this scenario: A longtime tax client of yours approaches you. They are interested in starting an online gaming platform with a colleague and have already landed a significant contract. The future of this business appears bright. A local bank has agreed to extend them a $75,000 line of credit, contingent on certain ratios and providing monthly financial statements and copies of all tax filings. You client asks you if you would be interested in performing nonattest services on their behalf. They are looking for a CPA to prepare the new venture’s monthly financial statements for the bank so the bank can monitor compliance with its ratio requirements, while the client maintains the books.

The current loan covenant only calls for a complete set of financial statements, classifying the engagement as a nonattest service. You do not need to be independent to prepare your client’s financial statements, however, based on the new venture’s growth trajectory, you believe that at some point in the future, attest services will likely be needed. Because of this, you decide to take certain steps to maintain your independence in case your client’s needs change, and you are asked to provide a service that requires independence down the road. Below are three steps you take to maintain independence.

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4 Key Facts about the New FASB Not-for-Profit Standard

Shutterstock_413674186Are you ready for significant changes to the financial statements of not-for-profit organizations? 

The Financial Accounting Standards Board recently released Accounting Standards Update (ASU) 2016-14 Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities.  ASU 2016-14 is the result of a multi-year FASB project conducted to review the financial reporting model for not-for-profits that has been in place for approximately 20 years.  As a result of the review, the FASB identified several areas of the financial reporting model that needed improvements or updates to provide better information to those that rely on the financial statements issued by not-for-profits. 

The full standard spans 270 pages (view it here) but it is not as daunting as it may seem. Here are four key facts about the new standard to keep in mind:

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7 Key Communication Points for Your Clients with Extended Returns

SevenAs the final extension deadline of October 15 (for individual clients) approaches, it is hard to believe it is almost time to flip the calendar to another year. Although finalizing your client’s 2015 Form 1040 is the most pressing item on the agenda, it’s important to focus on year-end planning. The good news is that with the tax legislation signed last December, tax planning should be easier since many provisions were extended through 2016 (or longer) or made permanent.  However, this is a presidential election year, and there is uncertainty about how a political change might impact tax reform and/or legislation.

Let’s focus on the good news (and what we can do for our clients). Here are seven topics to discuss with your clients as you wrap up their 2015 returns that will provide them the extra client service that they expect and deserve.

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Drones on the Horizon for CPA Firms in 2017

DroneNew federal regulations mean CPA firms will have easier access to an unexpected tool for audits and inspections: flying robots.

Unmanned aircraft systems, commonly referred to as drones, have a wide range of commercial applications, including law enforcement and rescue operations. CPA firms are finding ways to use drones to audit and inspect land, agriculture and facilities as a safer and more cost effective alternative to manual inspections.

For the past several years, commercial drone use has been mostly limited to larger firms because of a burdensome and costly Federal Aviation Administration (FAA) approval process. But on August 29, a new FAA rule took effect that broadly authorizes commercial drone operations in the United States, giving CPA firms of all sizes an easier path to incorporating drones into their operations. For example, the new rule allows the commercial operation of drones under 35 pounds, whereas previous regulations mandated that commercial drone operators had to apply for a special license from the FAA.

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A Passion for Education Proves Perfect Formula for Ross Riskin, CPA/PFS

Ross Riskin Profile PictureMeet Ross Riskin, CPA/PFS, CCPS, vice president of Riskin & Riskin, PC in Orange, Conn. Ross is definitely not your typical CPA; he has a unique passion for helping college students and their families,  a direct hand in CPA education and a thoughtful take on incorporating the AICPA’s Essentials of Financial Planning curriculum into the classroom.

AICPA: You’re founder and managing member of Riskin Advisory, LLC, described on your website as “a college financial planning practice.” How are you helping students and their parents plan for college expenses?

Ross Riskin: I work with families and recent graduates to help them develop plans to save and pay for higher education expenses in the most financially efficient manner. I approach the college and education planning process from tax, financial aid, and cash flow planning perspectives. Whether a family is trying to navigate the complex financial aid process, a grandparent is trying to develop a funding plan for their grandchild, or a recent graduate is trying to come up with a game plan to tackle their student loan debt, I am happy to advise them about the best course of action.

AICPA: How does being a CPA and a PFS support your expertise in education planning?

RR: Being a practicing CPA has provided me with the educational and professional experience required to enhance my knowledge of tax planning. Obtaining the PFS credential has helped me approach college and education planning from the perspective of an accountant and an adviser in order to develop comprehensive solutions for clients to help them see the big “financial” picture. Education planning is an area that hasn’t really been a focal point of planning to the same degree that tax planning and investment planning have been, and I am dedicated to working each day as a CPA/PFS to shift that focus and help families plan and take action in a holistic way.

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The Secret to Quality Audits and Fine Wines? Quality Control

Vineyard“Quality means doing it right when no one is looking.”
Henry Ford

Browsing the internet and looking at websites of CPA firms I notice they pretty much all talk about being quality firms. We all believe we have quality, but just what is quality?

As I sit with my evening glass, I realize what draws us to a fine wine is the diligent process to produce the beverage we enjoy. The process for producing a fine wine is not unlike the accounting and auditing world. Indulge me as I demonstrate the similarities.

Winemakers must identify critical points in the process where problems can arise in order to  eliminate or minimize precursors for taints and faults, and then rectify any problems that still do occur. 

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Helping Clients Plan Ahead for College Expenses

College savingsAs the cost of undergraduate, graduate and professional education continues to soar, having enough money set aside to pay for college is no longer a “nice-to-have” component of financial planning. It is essential to devise a thoughtful, cohesive plan to keep clients on course toward achieving their financial goals, within the larger context of their financial situation, investment horizon, risk tolerance, and resources.

Helping clients understand how much to save based on their education goals prepares them for the cost of college. 

Six Considerations

In trying to approximate future college costs and the amount clients will need to save to pay the college costs of the future, you’ll need to help them make several assumptions and determinations:

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7 Key Facts on the FASB’s Revenue Recognition Standard


Shutterstock_348454145Transitioning to significantly new accounting guidance is always a critical process, and that’s particularly true with the Financial Accounting Standards Board’s Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606). Since the effective date for this important guidance has been postponed, CPAs and their clients can now make the most of the added time they need to begin understanding and preparing to apply the standard. Here are seven facts that CPAs should know about this key standard.

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Seizing Opportunity Like a Rapping Founding Father

HamiltonWhen hip hop music first became popular, very few people would have thought that the music could be a great way to tell the story of America’s Founding Fathers. Yet, the wildly popular Broadway musical “Hamilton,” which won 11 Tony Awards, merges the historical narrative of the nation's first Secretary of the Treasury with hip hop music and lyrics, and proves that it’s possible to successfully create something fresh by offering a new take on a familiar subject.

Alexander Hamilton, the man whose life inspired the musical, started his career as an accounting clerk in the West Indies, then went to colonial America, where he would eventually lay the groundwork for the United States financial system. The musical came to life because Lin-Manuel Miranda, its creator and the man who originated the role of Hamilton, saw an opportunity and seized it by utilizing his musical talents to tell a 240-year-old story and delight unsuspecting audiences.

What does that have to do with CPAs? A lot, actually. Every day, CPAs use their knowledge and talents to meet a wide spectrum of client needs, often in ways that weren’t initially envisioned 50 or 20 or even five years ago. If you’d like to set the stage for new options in your career or practice, here are several opportunities that mesh well with CPAs’ core competencies and experience.   

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2704 Regs May Eliminate Discount: Practitioners Must Plan Now


Shutterstock_216511519

Most practitioners are aware by now that the Treasury has proposed regulations under Code Section 2704 that would generally eliminate valuation discounts on transfers of interest in family entities. This means that practitioners should advise all wealthy clients to review planning options before year-end when these new rules might become effective.

The AICPA will examine the regulations and offer comments at the Dec. 1 IRS hearing; however, to be safe, advisers should proceed with the assumption they will take effect as is. Outlined below are four practical planning steps practitioners should address with their clients before year-end.

Step 1: Identify Clients Affected

Clients who own large real estate or valuable family businesses that can currently be discounted for transfer tax valuation purposes, but which may not be able to be discounted after the effective date of the regulations, should focus on planning for the new regulations. In 2012, when the estate tax exemption was modified from $5 million to $1 million, many clients rushed to modify their plans in advance of this change. We will likely experience similar activity this year, as clients strive to complete planning to address the discount rush before year-end.

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You Fancy, Huh? One in Four Americans Envious on Social Media

In these waning days of summer, my Instagram feed looks like a Lonely Planet top 10 list. I don’t know how, but it seems like the 300+ people I’m following have all conspired to be someplace awesome, while I’m toiling away in the office. It can feel frustrating when it seems like everyone (except for you) is having the time of their lives – and bragging about it online.

A new survey, conducted by Harris Poll on behalf of the AICPA, found that when it comes to feeling envious on social media, I’m far from alone. In fact, many Americans are caught in a cycle of feeling jealous of friends who post about their lavish vacations and extravagant purchases, while admitting that they also post things solely because they are fancy or expensive.

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It’s Hurricane Season. Are You Prepared?

HurricaneTropical Storm Hermine may do more than ruin your Labor Day Weekend plans. After battering Florida’s gulf coast as the first hurricane to make landfall in 11 years, the weakened-but-still-potent storm is set to make a run up the East Coast. And in the Pacific, Hawaii is bracing for Hurricane Lester. The aftereffects of both storms may cause heavy rains, high winds and rough surf that will wreak havoc on travel plans and barbeques, could down trees and powerlines, and cause structural damage to buildings. The best thing you can do? Be prepared.

So what do you and your family need?

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Mr. Miyagi Can Help You Master the Exam

Pat-Morita_(Karate_Kid)In the iconic 1984 film The Karate Kid, Daniel, the young protégé of Mr. Miyagi, can’t understand why he’s being told to do basic tasks such as paint the fence, sand the floor, or polish the car with “wax on, wax off.” Daniel thinks he should focus on karate moves. While he pushes through and does what Mr. Miyagi tells him, Daniel eventually realizes the value and relevance of these tasks when he begins to spar. Each task in its own way serves as the basis for developing Daniel’s martial arts skills and ultimately prepare him to win the tournament against the Cobra Kai.

While we’ll never know if Daniel subsequently dropped his martial arts training to pursue a career as a CPA, one thing is certain – Mr. Miyagi taught the essential lesson that learning the basics and understanding foundational concepts is the key to success.

CPA candidates can learn a thing or two from Mr. Miyagi’s teachings when it comes to understanding the importance of the content covered in the Business Environment and Concepts (BEC) section, and how to manage it when sitting for the Exam. Since the introduction of BEC, the section has long been a mix of essential general business information, including corporate governance, economics, information technology, and financial and operations management, which provides a foundation for the other sections of Audit and Attestation (AUD), Financial Accounting and Reporting (FAR) and Regulation (REG). As a component of the Exam, the section reinforces the value of core business knowledge that a CPA must bring to the table when providing audit, accounting and tax services.

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3 Ways to Make Your Value Clear to Clients

Shutterstock_244717456Value pricing has been a hot topic among CPA firms for a while now as it enables them to focus on what clients really care about. All firms should consider adopting this approach. But while you may be able to quantify the value of what you offer clients in time, it’s crucial not to stop there. Do you know, for example, what truly matters to your clients? What they value in their relationship with you and the services you provide? While your approach to billing is important, the most critical concern for any firm should be the client’s perception of value.  These three steps will help you better understand your own value, ensure that clients are aware of all that you’re worth to them and enable you to take your client relationships to a much deeper level.

  1. Make It Personal

It is important for clients to associate high-quality work and a strong relationship with you and your firm. If another firm promised to complete the engagement for less, would your clients run? You have to differentiate yourself from the competition in a unique way. As simple as it sounds, you should initiate regular meaningful contact with your clients throughout the year, not just when a due date is looming as many CPAs do. Establish a system or process for reaching out so that it happens methodically. Make sure clients realize you aren’t just the person who delivers only compliance work or some required paperwork, but rather the trusted business adviser they can count on.

You can radically change your client’s perception of your firm’s value when you:

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Partnership Audits –Be Careful what You Wish For?

CrossroadsFor years, everyone involved with audits of partnership tax returns (tax professionals, the IRS and the taxpayers themselves) have complained about the often complicated and unclear Tax Equity and Fiscal Responsibility Act (TEFRA) rules. Disputes between the IRS and partnerships, as well as between the various partners, often dragged on for years. 

That is  if the IRS even bothered to start an audit – audit rates for partnerships were historically low compared to similar size corporate entities. Once an audit finally was completed, the IRS would face the onerous task of tracking down and collecting the assessments from each partner, often having to dive through dozens of tiers to find these ultimate taxpayers. Naturally, this resulted in difficulty collecting the additional tax, making the whole exercise seem futile to some. A better way was needed. TEFRA had to die.

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Gwen Jorgensen: From Tax Accountant to Olympic Gold Medalist

Gwen jorgensenIt’s not every day a tax accountant from Wisconsin wins a gold medal at the Olympics. But on Saturday, Aug. 20, Gwen Jorgensen, formerly of the EY corporate tax group in Milwaukee, became the first U.S. woman to do just that. Crossing the finish line with a time of 1:56:16, Jorgensen won gold in the triathlon.

Jorgensen, who earned a master’s degree in accounting at the University of Wisconsin-Madison and passed the CPA exam, didn’t even take up triathlon until after college. Jorgensen was a runner and swimmer in college, and was approached by USA Triathlon looking for college athletes they thought would be successful in the sport. At the time they contacted Jorgensen, she was still in school and had an offer from EY. She turned USA Triathlon down, but they convinced her to at least try triathlon as a hobby while she worked for EY. And, thus, a grueling schedule began: waking at 4 a.m. to ride her bike to the pool, swimming, and getting to the office at 8 a.m. After work, Jorgensen trained some more. And found that she loved triathlon.

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FASB Releases New Accounting Standard for Not-For-Profits


Shutterstock_238756393On August 18, 2016, the Financial Accounting Standards Board issued a standard that affects all not-for-profit entities issuing GAAP-basis financial statements. The new standard simplifies and improves how a not-for-profit entity classifies its net assets as well as the information it presents in financial statements and notes about its liquidity, financial performance and cash flows.

One goal of the standard is to improve how not-for-profits (like charities, foundations, colleges and universities, health care providers, religious organizations, trade associations and cultural institutions) communicate their financial performance and condition to their stakeholders.

 

Why a New Standard?

The current not-for-profit financial reporting model has held up well for more than 20 years, however, the FASB’s Not-for-Profit Advisory Committee and other stakeholders have reported that, while existing standards were sound, they could be improved to provide better information to users of not-for-profit financial statements.

Specifically, stakeholders voiced concerns about the following issues:

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5 Lessons Learned From CPAs #FirstSevenJobs


Thought bubbleEarlier this month Twitter user Marian Call, a singer-songwriter, started a viral trend when she tweeted her first seven jobs. Since then, social media has been all abuzz with users reminiscing about their #firstsevenjobs.

There’s no doubt that every job someone holds will teach them some kind of lesson. First jobs in particular teach those lessons in tough ways. To find out what lessons CPAs have learned, we put out a call for responses on social media; here’s what we heard.

Rand Gambrell

First seven jobs: Draftsman, McDonald’s Cook, Bus Boy, Wendy’s Cook, Bus Boy, Retail Sales, Hotel Sales Manager

Lesson learned: “No matter what your occupation or profession, perform your job to the best of your ability. People always recognize excellence.”

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Taxing Emotions: Death, Section 754 Elections and Serving the Client

Estate Planning 2Confronting the cold monetary and business realities of an estate is extraordinarily difficult in the midst of mourning. Even a well-planned estate’s complexity could mean the process drags on for months or even years, drawing out not only raw emotion but also tax exposure. Careful planning and a detailed explanation of your clients’ wishes are a must if you want to save their loved ones additional suffering.

My mother’s estate was moderate in terms of her personal holdings, but she also participated in substantial limited partnerships that passed to my brothers and me upon her death. While her home and personal effects were relatively simple to liquidate, the partnerships were a different matter.

There was no provision for a buyout of my mother’s interest upon her death. We found ourselves in business with people who didn’t know us, and had conflicting ideas about the future of the entity itself. Like so many partnerships, ours rarely had K-1s prepared in time to allow us to file our individual returns in advance of April 15th. We faced an indeterminate future of filing expensive extensions, estimating our individual tax liabilities and possibly increasing our exposure to an audit.

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5 Key Facts about the New FASB Leases Standard


Shutterstock_165181559What is a lease? And how should it be reported on a balance sheet? While your clients may not have spent much time pondering those questions in the past, the answers will take on new importance for them when a new Financial Accounting Standards Board standard on Leases becomes effective. While it’s true that the final guidance generally does not depart from existing GAAP as much as some earlier FASB proposals on this topic, practitioners should be prepared for significant changes in how all organizations that have lease assets—including private entities and not-for-profits—will account for leases. As practitioners begin to educate themselves on the guidance, here are five critical issues to keep in mind.  

  1. Lessees must now recognize operating lease assets and liabilities on the balance sheet. This is the most significant change, since it will require all organizations and their CPAs to take a different approach to lease accounting. Before this standard, U.S. GAAP only required this type of recognition for capital leases. Operating lease amounts were generally shown in the financial statements as rent expense on the income statement and in disclosures to the financial statements. In implementing the new guidance, entities will have to reconsider the ways they identify lease arrangements.

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Technology Revolutionizes the Transfer of Private Company Information

Shutterstock_104783210How can CPA firms, their clients and the investors and lenders with whom they do business easily access shared documents? How can CPA firms ensure that their signature won’t be used fraudulently or that there won’t be unauthorized changes in their financial reports? I spend a lot of time speaking with CPAs across the country, and these are some of the questions on the minds of firms that serve private company clients.

Public companies have a simple solution for sharing financial information in a secure environment. The Securities and Exchange Commission’s Electronic Data Gathering, Analysis and Retrieval (EDGAR) System collects, validates, indexes and forwards submissions from public companies’ SEC filings. It was launched in 1984 and offers public companies an efficient way to share corporate information, but there has never been a similar system to fit the needs of private companies. 

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Salsa, Scenery, and the CGMA


BSachdeva-3605Bikram Sachdeva loves salsa and bachata dancing. You might also find him capturing landscapes, skyscapes, and nature scenes with his camera during travels to Senegal, Ghana, Tanzania, Mongolia, El Salvador, Nicaragua, and Jordan—countries where he’s monitored over $ 1.5 billion portfolio of projects.

Sachdeva is a CPA and CGMA, to name just two of five professional designations on his business card. “I hear a lot of stereotypes when people see my business card,” said Sachdeva, director of fiscal accountability at the Millennium Challenge Corporation (MCC), an independent U.S. Government aid agency that works to reduce global poverty through economic growth. “Some people assume that because I’m a CPA, I’m not outgoing. They’re surprised when I tell them I love to dance and take pictures, especially because these interests tend to be outside the norm of what people expect from an accountant.”

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Summer Reading Recommendations

Summer reading 3Part III

Looking for things to read on your summer vacation? Here is the third and final installment of the AICPA summer reading recommendations. You can catch up if you missed Part I or Part II.

Valrie Chambers, CPA, MBA, Ph.D, Associate Professor of Taxation and Accounting, Stetson University, and regular AICPA Insights contributor recommends:

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5 Tips to Maximize Productivity - Both at Home and at Work

Shutterstock_438684127“Amateurs sit and wait for inspiration, the rest of us just get up and go to work.” ― Stephen King 

Whether it be racing to the office to conquer the business world, or managing all of our other daily commitments, we work hard every single day. And it’s not easy to stay productive with conflicting priorities. 

To keep you on track (and your sanity intact), below are five tips to inspire productivity at home and at work. 

(1) Don’t Be Afraid to Say “No.” 

Apple co-founder Steve Jobs put it the best. ”Focusing is about saying no.” From a professional standpoint, in order to truly do your job and meet your objectives, every time someone asks you to do something, you need to evaluate whether you are the best person to be doing that job, or even whether it should be done at all. Many of us are people pleasers and want to help, but saying “yes” is not necessarily the best thing for you or the organization. 

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How to Supercharge Your Not-for-Profit’s Board to Achieve Scalable Impact

Shutterstock_174469097When considering the future success of a startup organization, thoughts naturally turn first to a clearly defined vision, mission and strategy for putting plans into action. After that, many ask, “How do I galvanize my staff and volunteers to lead?” Social impact organizations affect the most critical challenges facing our society-- for example, lifting individuals out of poverty, providing access to vital services and fighting inequality. Having the right staff is critical and having the right board of directors is equally important. Scaling an organization’s impact means not just maintaining core processes, but also constantly sharing knowledge to build the organization’s capacity to affect change. Without leadership to keep the organization focused, staff can fall victim to fighting the daily fires that are a distraction from the larger goal of expanding the organization’s reach.

So how can you supercharge your board of directors? Here are four things to consider:

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Get to the Point: How to Make Travel Rewards Work for you


I don’t always get mail, but when I do it’s usually a credit card offer. And these cards are often tied to a particular hotel chain or airline. Many of these offers tout initial low-APRs, a waived annual fee and, increasingly, an obscene amount of rewards points – enough for a ROUND TRIP flight!!!! - if I only spend a few thousand dollars in the first couple of months.

However, my wife and I have been diligent about putting all of our charges on a credit card with a rewards program for a particular hotel chain and booking rooms at this brand whenever possible. The last thing I want is to lose our status with that chain by spreading ourselves too thin. This approach is working for us; over the past few years alone, we’ve paid for hotels in Denver, Boston, Puerto Rico, Baltimore and New Orleans using our rewards points. I’m by no means an expert travel hacker – that is, someone who has mastered collecting rewards points to earn free travel – but I’m making sure the money I spend on my card and the trips I take is working to my advantage. Seems simple, right? 

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6 Planning Ideas for CPAs Who Have Aging Clients

Aging clientsYou might have noticed the “graying” of your clients and thought “how can I, as a CPA and trusted adviser, provide services that meet their changing needs? What are the practice considerations surrounding those services?”

Recently, we served on a panel at the AICPA Conference on Tax Strategies for the High-Income Individual that focused specifically on these issues. Consider some of the following ideas gleaned from the session and how you may be able to incorporate them into your practice:

  1. Services: Cognitive challenges often affect executive functioning, such as the ability to handle day-to-day finances. Services you might offer include automating finances such as bill paying, monitoring investments, and reviewing banking records to identify elder financial abuse. With clients more commonly living into their 90s and beyond, budgeting and the recurring financial responsibilities of an individual or family take on a very different nature.

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Backstage Pass: EDGE Experience

Social mediaOften times, in-person conferences are the best time to get updates on industry news and to learn new things. The EDGE Experience, the premier career development event for young CPAs, focuses on building young professionals not only technically, but with soft skills as well.

Yesterday, Stacie Saunders, Senior Manager of Social Business at the AICPA, sat down with three CPAs to talk about how they began a professional strategy on social media. Saunders began the conversation by saying “most of us started on social media for personal reasons, but as you start to use it you can see how the benefits can cross over into a professional space.” So, how does one begin to use social media professionally?

As a special treat for AICPA Insights readers, we listened in and pulled tips and tricks for some of the most common questions surrounding social media.

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Advising on U.S. DOL’s Overtime Rule and Worker Classification Issues

Shutterstock_282297254I don’t know about you, but I’ve been having more conversations with my clients on employment issues lately. The new U.S. Department of Labor’s (DOL) overtime rule was announced May 18 and goes into effect December 1, 2016. Among other things, the new rule extends eligibility for overtime to certain white-collar workers by increasing the wage threshold from $455/week to $913/week ($47,476/year).

When my clients call with a “quick question” about the new rule, I chuckle to myself. These calls usually take an hour or more, as one question leads to another. These worker classification decisions can have major budget implications, particularly for small businesses and not-for-profits, and there is little time to come into compliance before December 1. In many small businesses without an HR department, employment issues fall under the finance or accounting function. 

Here is the basic guidance I’ve given to clients:

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