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

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

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

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Due Diligence Reminders for Tax Extensions

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

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

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

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

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

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

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

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

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

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

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

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

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

Form 4668 image via Shutterstock

Happy Financial Literacy Month

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

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

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Accounting Scholars Leadership Workshop Empowers Minority Accounting Students

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

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

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

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Snow White Meets the IRS and Other Fractured Fairy Tales

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

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

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Cathy Engelbert Makes History This Women’s History Month

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

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

Cathy Engelbert Writes a New Chapter

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

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Reasoning with Reasonability

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

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

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

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

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

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

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Chicken & Waffles + Potato Chips = Innovation

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

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

1.  Foster knowledge and solutions

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

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

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

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

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

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

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

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

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3 Hedging Strategies for Concentrated Stock Positions

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

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

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Rules and Resources for ACA Due Diligence

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

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

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

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

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

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

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Big Data = Big Opportunities

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

That’s the power of big data.

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

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Are You Cheating on Your Spouse Financially?

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

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

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

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AICPA Announces 2015-2016 Legacy Scholarship Award Applications

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

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

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

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

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

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

For more information, check out this short video 

  

The AICPA Legacy Scholars program comprises four distinct awards:

·         AICPA/Accountemps Student Scholarship

·         AICPA Foundation Two-Year Transfer Scholarship

·         AICPA John L. Carey Scholarship

·         AICPA Scholarship for Minority Accounting Students

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

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

 

Due Diligence and ACA: A CPA Raises Some Tough Questions

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

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

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

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10 Simple Tips Any CPA Can Use to Strengthen Client Relationships

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

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

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

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

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

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

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How the New Congress Might Affect the CPA Profession

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

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

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

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

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

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

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Disaster Planning and Recovery Advice from CPAs

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

But what about their fiscal well-being?

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

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Top 10 Tax Resources for the 2015 Tax Season

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Give Thanks, and Give Back

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

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5 Key Social Media Trends for CPAs in 2015

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

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Accountants Play Critical Role in Establishing Global Transparency

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

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

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

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4 Tips for Turning Tax Season Lemons into Lemonade

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

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

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CPA Exam Q1/Q2 2015 Score Release Timetables

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

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

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

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

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

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

This video provides a quick overview.

 

 

 

Continue reading "What Could a Next-Generation Peer Review Program Look Like?" »

Happy Holidays from AICPA Insights

Winter

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

Winter scene image via Shutterstock

5 Tips for Building Your Financial Planning Practice

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

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

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

Continue reading "5 Tips for Building Your Financial Planning Practice" »

Igniting a Passion for Learning

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

Creating a Spark

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

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

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

Continue reading "Igniting a Passion for Learning" »

Strengthening the Profession’s Core with Relevance, Rigor and Reach

Tommye_barie_headshot2I am excited to write to you as the new chair of the AICPA Board of Directors. I hope to meet many of you at the numerous conferences, state society meetings and firm visits that I have lined up between now and next October. The Chair’s Letter also is a great forum to discuss common experiences and important developments. Throughout the year, I will share my thoughts on key trends and emerging professional issues. I hope you’ll share your comments with me and our fellow CPAs so we can have a robust dialogue.

Let me begin by telling you a little about myself. I grew up in the tiny town of West Liberty, Kentucky, home to about 2,000 people and two stoplights. I was raised on small-town values that remain with me today. These values – hard work, integrity, community and commitment – first attracted me to the accounting profession, and now they will shape my stewardship as AICPA Chair.

Continue reading "Strengthening the Profession’s Core with Relevance, Rigor and Reach" »

Dynamic Firm Benchmarking: the New MAP Survey Platform in Action

MAP surveyHave you ever performed an in-depth comparison of your firm’s standing against other firms of the same size? The 2014 PCPS/TSCPA National Management of an Accounting Practice Survey provides some new and valuable ways to assess where your firm stands and plot your future course. If you participated in the survey this year but haven’t really delved into the results, which became available in November, you definitely want to check them out. Thanks to a new online platform, it’s much easier to take a peek at how firms like yours operate. And even if you didn’t participate, the survey offers some valuable information that will help your firm plan.

Take the case of a single owner firm like mine. We have a boutique corporate tax practice. In addition to myself, our permanent staff includes one CPA and one CPA candidate, but we add an administrative person and per diem help in busy season. When I’m planning for the future, I often wonder what a top performance single-owner firm looks like, but it’s tough to find more than anecdotal information.

Continue reading "Dynamic Firm Benchmarking: the New MAP Survey Platform in Action" »

Benchmarking the Finance Function

Global management accounting principlesOn October 22, CIMA and AICPA released Global Management Accounting Principles, which are available for download at CGMA.org. 

When explaining the principles, the first thing I usually mention is that they are not a prescriptive set of rules. They are principles-based, comprehensive, best-practice guidance designed to help organizations (and specifically finance leaders, CEOs and boards) benchmark and improve their management accounting functions. 

The Global Management Accounting Principles encompass four core principles focused on four outcomes:

  • Influence - Communication provides insight that is influential
  • Relevance - Information is relevant
  • Value - Impact on value is analyzed
  • Trust - Stewardship builds trust

The principles outline the fundamental values and qualities that represent management accounting. Application of the principles, combined with talented people and robust performance systems, will help drive effective management accounting functions.

The document is most impactful in section five, where the core principles are applied to 14 management accounting practice areas. Here, extensive good practice guidance is provided in key areas such as treasury management, financial strategy, cost transformation, budgetary control, investment appraisal and risk management. The guidance can be used to self-assess existing processes.  A diagnostic checklist is available to facilitate the review.

A complimentary resource to the management accounting principles is the CGMA Competency Framework, which is designed to help management accountants understand knowledge requirements and assess skills needed for current and desired roles. In addition to technical areas, the Competency Framework addresses business, people and leadership skills.

The Global Management Accounting Principles are focused on the organization. The Competency Framework is directed at the individual. Combined, they are powerful tools that we hope you and your team find useful.

Paul Parks, CPA, CGMA, Associate Director- Business Industry and Government, American Institute of CPAs  

AICPA Introduces New Disruptive Technology

Audit data analyticsWith the issuance of the AICPA’s Audit Data Standards, the Institute has introduced what promises to be a significant disruptive technology – data on demand. ADS were designed to bridge the gap between disparate Enterprise Resource Planning systems and apps (tools and technologies) that analyze a company’s data. Until now business information consumers had to rely on IT personnel to either develop customized extraction routines or develop applications within the ERP system to do what users were asking for. But, as many business information consumers know, that process is often expensive and time-consuming. All that is about to change.

Continue reading "AICPA Introduces New Disruptive Technology" »

AICPA President and CEO Looks Ahead to 2015

In an interview with CPA Letter Daily, AICPA President and CEO Barry Melancon, CPA, CGMA, reflects on the accounting profession’s successes in 2014 and discusses the opportunities and challenges of 2015. Below is an excerpt from the interview; for the full interview, watch the accompanying video.

 

 

 

Continue reading "AICPA President and CEO Looks Ahead to 2015" »

In the News: CPAs More Bullish on Economy Heading into 2015


2015Yesterday, the AICPA announced the results of the fourth quarter AICPA Economic Outlook Survey. The survey, which polls CEOs, CFOs, controllers and other CPAs who hold senior management accounting roles, found higher expectations for profits, revenue and expansion in the coming year.

Some 64 percent of survey takers now report that they are optimistic about prospects for the U.S. economy over the next 12 months. That is up from 52 percent last quarter and 38 percent a year ago.

As Politico reports, the survey found that respondents are actually slightly more optimistic about their own companies’ prospects (67 percent, up 2 percentage points from last quarter), with 71 percent saying they expect their business to expand in the coming year.

Continue reading "In the News: CPAs More Bullish on Economy Heading into 2015" »

Did You Receive an AICPA Survey on the Next CPA Exam?

CPA Exam SurveyThe business environment has changed profoundly over the past few years. New regulations, developments in technology and global expansion have altered the way we work with one another. The AICPA closely monitors each of these factors and considers how they impact the future of the accounting profession.

Given this constantly evolving landscape, we need to take a closer look at how changes in the environment affect those who plan to enter the profession – the newly licensed CPAs. Experience and education requirements for licensure vary by state, but passing the Uniform CPA Examination is a must for everyone.

Have you received a survey asking for your feedback on what content should be tested on the CPA Exam? (Remember to check your spam folder!) If so, your input – which directly reflects your experience in practice – is instrumental in helping us understand exactly what topics the Exam should include.

Continue reading "Did You Receive an AICPA Survey on the Next CPA Exam?" »

3 Pitfalls to Avoid on the Road to Becoming the Firm of the Future

Becoming the firm of the futureCPA firms are at an important turning point. We have a choice: we can stick to the practices and procedures we know—ones that have admittedly helped us build the success we enjoy today—or we can take the kinds of bold steps that will ensure our future relevance and prosperity. This will be an understandably tough decision. To prosper over the long-term, though, firms must address the radical changes taking place in the domestic and international marketplace, including increasing market and technical complexity facing CPAs and their clients, as well as the expectations of a new generation of professionals. The profound transformation in so many areas requires a similar alteration in the way we manage our practices. If our firms don’t identify the obstacles preventing us from affecting meaningful change, we risk being left behind. In particular, there are three pitfalls that will make it challenging even to get started on the road to transformation.

Continue reading "3 Pitfalls to Avoid on the Road to Becoming the Firm of the Future" »

Going out on a Limb for Tax Extenders

Tax blogAre we there yet?  Are we there yet?  Are we there yet? Are we there yet?

~ One of my grandsons

What’s the million dollar topic on members’ minds these days? It’s always a multiple choice with me so here you go:

1. The IRS

2. The congressional lame duck session

3. Extenders

4. Starting busy season

5. Government appropriations

6. Affordable Care Act compliance

 7. The Keystone Pipeline

8. Immigration reform

9. Bipartisan cooperation in Washington

10. All of the above

(Ed, why is “starting busy season” on your list?  When you were in practice, did you look forward to starting busy season?  And isn’t bipartisan cooperation in Washington an oxymoron?  What were you thinking?)

OK, fair enough, maybe not starting busy season, but busy season is a key to a successful practice year, and getting through it with fewer gray hairs wouldn’t hurt. (By the way, take a peek at our recent Tax Power Hour (for Tax Section members) for some tips.) 

I wish it were bipartisan cooperation, but the obvious answer is “extenders.”  We’re hearing from lots of members and rightfully so. Over 50 provisions expired last December.  Our tax advocacy team has been talking about those provisions on Capitol Hill for over a year.  And we recently sent in a letter about them.  IRS Commissioner Koskinen even asked for a copy of the letter to tout with members of Congress because of the IRS’ interest in getting off to a smooth and early start to filing season. Truth is, energy and immigration policy aren’t my thing but they really are intersecting with tax policy on Capitol Hill this year.  So what's the scoop?

The talk about quick passage of extenders is being replaced by congressional interest in smoothing the way for the Keystone Pipeline; indeed, legislation has passed in the House and Senate that the President has indicated would be vetoed (and they do not have enough votes to override the veto). And the President has acted on immigration issues through executive order; the Republicans have said such unilateral action could result in legal action to stop it.  And if that weren’t enough, there’s other legislation, such as the Terrorism Risk Insurance Act, that requires congressional attention; and even talk about letting the continuing resolution, the temporary government funding mechanism, expire on Dec. 11. It may not be a likely result but even a remote possibility of a government shutdown leading up to tax busy season is not good!

There has also been quite a bit of talk on dealing with extenders, which is good news.  Piecemeal or blanket extension?  One year or two? The House has been interested in the permanent extension of some provisions and a temporary extension of the remaining provisions, and the Senate leans “blanket.”  And lots of groups are posturing for something to happen - one broad coalition of business groups has urged Congress to act right away lest uncertainty and instability be injected into the marketplace.  Even outgoing Ways and Means Chairman Dave Camp has said he thought the Democrats were acting in good faith.

But some would like to see provisions wither away on the vine, for example, retroactive extension of the decades old wind production tax credit has garnered a long and vocal list of opponents. And the President recently warned he would veto a congressional deal in the works, contending that it benefits corporations more than families.

However, there is still hope and I’m a glass-half-full type of guy so let me go out on a limb and give you my predictions (OK, maybe they’re wishes):

  • Congress will enact a two-year extension of the 2013 extenders - one year retroactively - during the lame duck session.
  • Congress will also pass another continuing resolution to fund government though busy season.
  • IRS will expeditiously finish the forms and complete programming and get things off to a smooth start.
  • The President and Congress will quietly work towards a bipartisan solution to immigration, energy issues and other items that need attention.

And a giant duck will land on the end of the limb I just went out on . . . is that a crack, I hear? (Ed, that wasn't just your grandson asking if “we're there yet;” it was all 400,000 of the AICPA’s members.)

Edward S. Karl, CPA, Vice President of Taxation, American Institute of CPAs

Going out on a limb image via Shutterstock

Happy Thanksgiving from AICPA Insights


LeavesWe are grateful to you, our readers. Your thought-provoking comments continue to spark interesting discussions and a lively sharing of opinions. Thank you for your readership.

We look forward to the next conversation – after the turkey and stuffing, of course! Enjoy this time with your family and friends, and have a safe and happy Thanksgiving holiday. 

 

 

7 Tips for Starting Your Own Practice

Starting LineEntrepreneurism is on the rise. With start-up fever igniting the Bay Area to the Chesapeake Bay what CPA hasn’t considered—even for a moment—starting his or her own firm? We each started our own firms and know firsthand about the advantages and challenges of venturing out on our own. A few months ago we participated in a live Facebook chat on how to start your own practice. Many of you joined us and asked great questions such as: What prompted you to start your practice? What is the best way to get your name out there? What were some of the unexpected challenges you encountered?

What’s our advice? Here are seven tips for starting your own firm:

Continue reading "7 Tips for Starting Your Own Practice" »

World Congress of Accountants 2014: Grande Successo!

ColosseumI’ve just returned from the World Congress of Accountants 2014 in Rome where the CGMA designation, powered by the AICPA and CIMA, served as the imperial and event app sponsor. I can tell you unequivocally, in English as well as Italian, that it was a great success!

WCOA is organized by the International Federation of Accountants and is held every four years. As lead sponsor, the event provided us the ultimate opportunity to showcase the CGMA designation, the US CPA credential, and the AICPA to an audience of nearly 4,000 professional accountants from around the globe.

At WCOA, we launched a series of reports and briefs that explore the latest trends shaping the future of business. Here’s a synopsis of those reports:

Continue reading "World Congress of Accountants 2014: Grande Successo!" »

Get Ready for the Medicare Open Enrollment Deadline

Elderly couple receiving financial adviceCPA financial planners and others who advise clients on healthcare and estate planning issues will want to know that the Medicare annual open enrollment period runs Oct. 15 through Dec. 7, 2014.

Many people understand they can switch from their 2014 standalone Part D prescription drug plan to a new standalone plan for 2015. Medicare beneficiaries can also drop their Part D coverage altogether, although this is not a good move unless you are moving from traditional Medicare to a Medicare Advantage plan with a prescription drug feature.

Medicare beneficiaries can also do the following:

1. Change from traditional Medicare to a Medicare Advantage plan.

2. Go from a Medicare Advantage plan to traditional Medicare, although the choices may be limited when it comes to finding a Medicare Supplement plan.

3. Transfer from their current Medicare Advantage plan to a new Medicare Advantage plan for 2015.

4. Move from a Medicare Advantage plan without prescription drug coverage to a plan that offers prescription drug coverage. Note that the Medicare beneficiary can also move from a Medicare Advantage plan that offers prescription drug coverage to one that does not.

Continue reading "Get Ready for the Medicare Open Enrollment Deadline" »

Employers’ Denial of ACA Impact Could Cost Them a Fortune

ACA-Image 600x600In all of my dealings with employers on Affordable Care Act (ACA) matters since 2010, I’ve reached a few reasonably sound conclusions.  Here’s one: employers are faking it!  They are doing so when it comes to how IRS controlled group rules influence the ACA’s “Applicable Large Employer” (ALE) determination.  It is this determination that serves as a foundational component of the ACA’s Employer Shared Responsibility (“pay or play”) mandate.  To recap, employers of 50 or more full-time equivalent employees (100 or more for 2015) are expected to offer ACA compliant coverage (play) or pay assessable payments.  The amounts of these payments are based on factors that include the number of full-time employees and how many of them qualify for Exchange-based premium subsidies.

Continue reading "Employers’ Denial of ACA Impact Could Cost Them a Fortune" »

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