Welcome to AICPA Insights, the official blog for the American Institute of CPAs. AICPA Insights features posts from AICPA staff and accounting professionals on a variety of topics affecting the accounting profession, the AICPA and its members.
In 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.
Over the past three decades, a growing number of CPAs expanded their service offerings beyond tax compliance to help individuals and families address and plan for all aspects of their financial lives. These aspects might include paying for children’s education, transferring wealth, protecting assets, funding retirement and more.
As CPA financial planners help their clients realize their long-term goals, this expansion of service offerings opens up new revenue streams and deepens client relationships.
Earlier this year, as part of the AICPA’s PFP Section’s CPA Financial Planning Thought Leadership series, I moderated the webcast, “Being an Advisor of Choice.” Panelists shared their perspectives on working with individual and closely held business clients, the benefits of this expanded business model to the practitioner and firm and the outlook for maintaining this model. (See the note at the end of this blog post about how to download a recording of the webcast.)
During the webcast, we discussed a great deal of information. Here is a quick rundown of eight ways you can become your clients’ “advisor of choice.” How many of these are you already doing and how many would you like to accomplish?
1. Add Financial Planning to Your Practice
Tax compliance is becoming a commodity. Integrating financial planning into your practice offers a chance to make a deeper connection with clients, requiring you to give objective advice and keep clients’ best interests at the forefront.
2. Determine Your Value Proposition
When you add financial planning to your practice, you also add value, but you figure out what kind of value you want to add in order to grow your bottom line. The last thing you want to do is become just another firm offering the same services as everyone else.
3. Avoid Becoming a One Trick Pony Advisor
Clients are outgrowing the services of mono-line advisors. If you were simply a specialist in tax or investments, your clients will grow beyond your services.
4. Know Your Strengths
Position yourself as the advisor of choice. You have an excellent professional reputation, offer high quality professional advice and possess transferable skills that are diverse and applicable to various client situations.
5. It’s all About the Relationship
Deepen and enhance the relationships you have with existing clients who already understand your role as their advisor of choice. You may even need to reposition yourself with existing clients, particularly CFOs or controllers who retain you just for audit work or corporate compliance.
6. Listen to Your Clients
Competent advisors do their best work when they sit down with their clients to let them voice their concerns about the current financial world they live in. Listen for issues you can help understand and solve.
7. Build on Your Three Distinguishing Qualities
As a financial professional, you are competent and objective and maintain the highest integrity. Remember these qualities and seize the best opportunities you can.
8. Break the Mold
Advisors who are willing to address the wide range of issues that come into play and work with their clients and other specialists to serve their needs will be in a great position to be a strong, key resource.
AICPA PFP Section’s Thought Leadership Series
Access the free webcast recordings and presentation materials from the AICPA PFP Section’s Thought Leadership series featuring forward thinking from CPA financial planners advising their clients in tax, estate, retirement, risk management and investments. Two panels will host free thought leadership webcasts on November 12th and 13th covering investments and the outlook for the CPA financial planning profession.
Lyle Benson, CPA/PFS, CFP®, President and Founder, L.K. Benson & Company. Based in Baltimore, Lyle’s firm specializes in personal financial planning, tax and investment advisory services for high income individuals and families, as well as corporate executives and entrepreneurial, closely held business owners across the country. Lyle is chair of the AICPA’s PFP Executive Committee.
CPAs provide tremendous value in the area of financial planning by helping clients understand changes in laws, as well as trends which can affect their bottom line. Serving as trusted advisors, CPAs who work in personal financial planning are able to tailor their advice to meet the changing needs of their clients in an ever fluctuating economy.
Below are a few recent media articles highlighting the guidance of CPAs.
If you have an eligible health insurance policy with at least a $1,250 deductible -- or $2,500 for family coverage -- you can contribute to a health savings account, said Love. You can contribute up to $3,300 in 2014 if you have individual coverage, or $6,550 for family coverage (plus $1,000 if 55 or older). Contributions are tax-deductible (or pretax) and can be used tax-free for medical expenses in any year.
Newsday reports that, with mortgage rates hovering around 4 percent, many Americans are considering purchasing a home. However, it is important to not rush to a lender until you're creditworthy. The best way to do that is to raise your credit score. AICPA member Kelley Long, CPA/PFS, advised that not applying for other loans or opening new credit cards would be one way to avoid damaging your credit score. In addition, not closing cards is a prudent step, because it reduces your available credit and therefore boosts the percentage of available credit your other cards represent.
A recent FoxBusiness.com article relied upon the expertise of two CPAs to shed light on the havoc financial fraud can cause the elderly. “If you’re 20 [years old] and something happens to you financially, you have a long time to make a difference “If you’re older and not able to go back to work and recover, having fraud perpetrated on you can significantly change the rest of your life,” said Mackey McNeill, CPA/PFS.
It can be difficult for those who are worried about their elders to gain more insight into their financial decisions to help prevent fraud, but Leonard Wright, CPA/PFS advises that effective communication can help break through. “There are ways to communicate with the elderly so they don’t feel like you’re taking over, said Wright. “Tell your elderly loved ones that you can get a second opinion with finances just like you do with doctors.” This could also mean explaining the importance of calling another family member before sending any money to a third party or agreeing to a new contract, credit card or investment.
Helping clients plan for Social Security benefits may involve a lot of information gathering and research, but doing so could save them a heap of headaches and a lot of money. Here are 12 planning tips that stand out to me as potential opportunities. These can provide great relief and keep your clients out of the danger zone.
What were you doing at 7:32 p.m. on April 23, 2011? Chances are that Google, Facebook, Microsoft, Apple, your phone company and your Internet Service Provider know. If you share a computer, all of the other users may know. Your employer may know. As will the government, if it so chooses. And if this isn’t enough, they may even know where you were when you were doing it.
Is this a problem? Well, that depends. Do you like getting bombarded with online ads and email obviously based on your recent surfing habits? Are you researching that perfect gift for your wife or husband, or planning a big surprise party? Perhaps you are pregnant or researching medical symptoms and don’t want anyone to know?
Social Security survivors’ benefits are similar to Social Security retirement benefits, but there are certain planning opportunities available to the widowed spouse. As the family’s trusted advisor, make sure you understand these opportunities in order to give your clients the most beneficial advice possible. Here are three planning opportunities for survivors:
1. Planning for Spousal Income Needs. Depending on the age of the parents and children, there is a gap in the survivors Social Security benefits. From a financial planning aspect, it is imperative that you discuss the impact this gap will have on their financial goals. After all, it will affect them for years to come and will determine their income.
Let’s go back in time to December of 1978. You are longing for the weekend and thinking about going to see the new movie “Grease”that everyone is talking about. You need to get away from the three channels on your television set, as all that you see is the news about anti-Shah protestors in Iran and the craziness of someone giving a baseball player $32 million in a four-year contract. Maybe President Carter can do something to get us back on track. Well, at least you have your brand new Betamax and can record whatever television you miss – as long as it is not more than one hour long...
At work, your client has asked you to perform bookkeeping services for them. The client needs you to process their payroll, record certain journal entries in their general ledger book and calculate the amount of sales tax that they need to remit to the state. Additionally, the client needs you to prepare monthly financial statements for the owners and the bank that provides the entity’s line of credit. You sit down with a few sharpened pencils and ledger paper and draft those financial statements. The recently issued Statement on Standards for Accounting and Review Services No. 1, Compilation and Review of Financial Statements,requires that you, at a minimum, perform a compilation engagement with respect to those financial statements that you submit to your client. So, you issue a compilation report along with those financial statements. The application of the compilation literature is easy to understand and apply.
As part of its on-going commitment to helping members maintain and enhance audit quality and to improve the consistency of quality across the profession, the AICPA recently launched the Enhancing Audit Quality Initiative. Because of the critical nature of the initiative, the AICPA Peer Review Team will take immediate action on two facets of the initiative: identifying emerging industries and high priority audit areas and applying a combination of outreach, training, and robust peer reviews in these industries and areas.
The Peer Review Team has developed a list of potential “deep dive areas” or emerging industries and risk areas, derived through careful analysis of the following:
While the Social Security Administration calculates Social Security benefits, it is your due diligence to know the basics so that you can understand how an additional year of earning will affect your clients’ projected benefit.
Some people think Social Security benefits are complicated to figure out; in actuality, it’s pretty straightforward. Social Security benefits are computed through this two-step process:
Compute the average indexed monthly earnings, called AIME.
Compute the primary insurance amount, based on the AIME.
The AICPA governing Council’s fall 2014 meeting is taking place this week, Oct. 19 to 21. Updates will be provided on several important issues to the CPA profession, including management accounting, the CPA Exam, ethics and audit quality. Arleen Thomas, CPA, CGMA, AICPA Senior Vice President Management Accounting and Global Markets, will highlight important milestones leading to 2015 for the Chartered Global Management Accountant designation and explore the evolution of the Uniform CPA Examination. Susan Coffey, Senior Vice President – Public Practice & Global Alliances, will update members on the profession’s commitment to quality and the code of conduct, as well as the pending amendment to the definition of attest. You can follow along with Council action with #AICPAGC14 on Twitter or view the stream below. (Email subscribers can view the stream on our website.)
Live Blog Updates from AICPA Fall Council 2014 #AICPAGC14
"Intaxication: Euphoria at getting a refund from the IRS, which lasts until you realize it was your money to start with." Unknown, from a Washington Post word contest
When is a CPA practice not "practice before the Internal Revenue Service?" And if it is not practice before the IRS, does that mean it’s okay to use contingent fees in a client arrangement?
Why do I write about this topic now? This past July, the U.S. District Court for the District of Columbia issued an opinion (Ridgely v. Lew) that takes a significant strike at IRS’s ability to regulate contingent fee arrangements.
Gerald Ridgely is a CPA who practices with Ryan LLC, a global tax services company, but not a registered CPA firm. Ridgely sued the IRS, arguing that the Service exceeded its authority under Circular 230 in regulating the preparation and filing of ordinary refund claims, which practitioners file after a taxpayer has filed his original tax return but before the IRS has initiated an audit of the return. Ridgely contended that the inability to charge a contingent fee for a refund claim cost him clients and significant revenue. Under a contingent fee arrangement, the client only pays the fee (or a percentage of the refund) if the claim is successful.
New Year’s Eve is one of the few holidays celebrated almost universally in countries around the world, with parties, champagne toasts, and fireworks. This year, December 31 will also be a key date for management accounting professionals. That’s because it marks the final day that AICPA voting members who meet relevant experience requirements are exempt from the upcoming CGMA exam.
The exam’s unique strategic case-study format is designed to assess problem-solving skills in real-world business situations and test a broad range of competencies defined as crucial by businesses around the world. Since the case study format is quite different from traditional exam techniques like multiple choice or fill-in-the-blanks, we recently released a practice exam that candidates can use to prepare for the exam.
CPAs and other financial services firms largely rely on referrals to grow their client base and stay in business. This business model has worked for a countless number of years. However, the way clients make decisions has changed, which affects your rate of referral. Under the new model, a referral is only the first step. Used the right way, technologies like websites, email and social media can energize your current client base to make referrals and increase the conversion rate of referral prospects.
There is no longer one linear funnel for client referrals, but rather a series of influencing points that lead to channels where the prospect is most comfortable making contact. Today, a referred prospect is likely to make initial contact in a number of ways:
Through your website. They will visit your website to understand why your firm is different and whether your value proposition aligns with the prospect’s expectations.
Social media. A prospect will turn to social media to get a sense of your firm’s focus and culture. They may also turn to review websites that allow users to leave feedback, such as Yelp.
Email newsletter. Prospects might sign up for your e-newsletter to get a preview of what it is like to be your client.
Personalized marketing is at work all around us. We see it every day, from personalized key chains and other souvenirs sold at tourist destinations to featured recommendations on Amazon.com, companies are tailoring products to make them more targeted and personalized.
This summer Coca-Cola launched its “Share a Coke” marketing campaign aimed at teens and Millennials. In an effort to personally connect with consumers, Coca-Cola replaced its iconic script logo with 250 of the most popular names of young people. Personalized labels could be found on 20 oz. bottles of Coke, Diet Coke and Coke Zero all summer long. Coca-Cola also encouraged customers to share their experiences on social media and many Coke enthusiasts responded by posting pictures with soda bottles bearing their names. In fact, during the first half of the campaign consumers shared more than 125,000 posts via social media networks. The Wall Street Journal reported that Coca-Cola soda sales in the U.S. increased by more than two percent following the launch of the campaign.
Why was the Share a Coke campaign so successful? Studies show that people prefer receiving customized messages rather than generic ones. Individualized communication signals that the consumer is unique and important. Like Coca-Cola, CPAs can take steps to personalize their marketing efforts.
The American Institute of CPAs recently announced the 2014 Accounting Scholars Leadership Workshop graduating class. The Workshop, an annual invitational event now in its 20th year, is open to ethnically diverse accounting and finance majors who plan to pursue the CPA license.
The 114 students selected for this year’s Workshop successfully completed the two-day program, which strengthened their professional and leadership skills, while highlighting the career possibilities becoming a CPA affords. The AICPA Foundation covers all program costs, which include the student attendees’ transportation, hotel accommodation, and meals.
“I am confident that the life lessons learned at ASLW will benefit these students and will help them immensely along their path to becoming CPAs,” said Kim Drumgo, AICPA director of diversity and inclusion and Vice Chair of the National Commission on Diversity and Inclusion.
October is here - the leaves are changing color, there’s a chill in the air and we’re drawing close to the end of another year. At your CPA firm, you’re likely getting ready for performance reviews, preparing for busy season and working on strategic planning for 2015 and beyond. As you put together your marketing plan, be sure to spend some time formulating a social media strategy. This will help determine how often you blog, what social channels you use and whether you invest in social media advertising – all of which will impact how you allocate resources for the coming year. Creating a social media strategy doesn’t have to be a long and arduous process. You can get started by asking these five questions:
Wouldn’t life be great if we all had a crystal ball? While wizardry and fantasy may sound like a great way to see the future, no one would actually advise a client or employer on assumptions based in magic and hearsay.
Typically, we serve our clients and employers based on fact-based historical reporting, which tells us where we are and where we’ve been. However, there is another way to offer guidance and opinion: predictive analytics, a process-driven activity that combines facts about the past with inferences to anticipate the future.
Dr. Smith left you a voicemail at 10 p.m. on a Sunday night. You couldn’t make out the entire message due to a weak cellphone signal and background noise, but you gathered he was talking about the Health Insurance Portability and Accountability Act and needing you to sign something called a Business Associate Agreement.
Dr. Smith is an excellent dermatologist, but you know from doing his taxes that regulatory compliance isn’t necessarily his forte.
In May 2014, the AICPA’s Future of Learning Task Force announced four broad recommendations to positively impact the future of learning for the CPA profession. The recommendations are:
Innovate and experiment
Ignite a passion for learning
Make learning personal
Measure what matters
These recommendations and insights, as well as other resources related to the initiative, are now available on the new Future of Learning site. If you haven’t yet visited the site, I highly recommend you do so to gain insight into the drivers behind the initiative and its recommendations. Navigating the site will take you on a journey that explores change within business, the evolving workplace and shifts in the CPA profession. You’ll gain a better understanding of trends impacting learning, ranging from how technology is rapidly changing delivery options to the impact of Millennial expectations on learning and the workplace.
In this four-part blog series, we’ll go in depth and look at each of the task force recommendations, as well as ways you can begin to implement them.
At launch in 2012, we promised our members and the global employer market that the Chartered Global Management Accountant designation would recognize and support accounting professionals who know how to connect finance to strategy. Backed by the combined resources and reputations of the AICPA and CIMA, CGMAs would be recognized as finance leaders who see across the entire organization to make better business decisions.
In the last few months of 2014 we’ll deliver the fundamental pieces that will help define the profession of management accounting and solidify the CGMA’s position as the premier global management accounting designation.
Are you aware that the new Digital Accountability and Transparency Act, signed into law earlier this year, will have a significant impact on CPAs who work in government and or interact with the federal government?
Known as the DATA Act, the new law calls for the adoption of a data standard that is “a widely accepted, nonproprietary, searchable, platform-independent computer-readable format” to report federal contract, loan and grant spending information by federal programs. CPAs need to be aware of the changes so they can better serve their clients and be prepared to help agencies meet the new requirements.
Have you ever stopped and asked yourself why you would ever want to make a tax return engagement more efficient, if it really only means you will charge less over time?
Stay with me here while I explain how value pricing and efficiency can go hand-in-hand. Below is a hypothetical chart of fees incurred to prepare a 1040 return, as well as the amounts actually invoiced. I am going to explain how you are leaving money on the table.
Year one is largely spent reviewing the prior year returns to familiarize yourself with the client and to establish your internal workpapers. This will naturally take more time. So when you bill the client and see that you have incurred $1,500 in fees, your gut might tell you that the return is not worth that amount. So, you discount the fees to reflect the amount that you a) think the return was worth and b) think the client is willing to pay.
As part of its commitment to serving member needs, the AICPA Forensic and Valuation Services Section regularly surveys FVS professionals to get a sense of the state of the practice today and the trends these professionals will face in the short term. According to the recent 2014 AICPA Survey on International Trends in Forensic and Valuation Services, done in conjunction with CPA Canada, there is currently a healthy demand for forensic and valuation services, and very strong growth potential for the future. This is good news.
The survey found that 76 percent of forensic and 54 percent of valuation respondents expected their practices to grow, with the majority expecting growth of between 10 percent and 50 percent over the next two to five years.
Here are a few predictions — by practice area — from the survey:
September is underway and that means it’s back to school for students. As teachers finalize their lesson plans, a growing number may be incorporating financial literacy education. In fact, many schools around the country have already begun integrating financial literacy into their curriculums. And it makes perfect sense.
Helping young people understand financial issues is a matter of great importance. Younger generations are facing an increasingly complex financial field, compared to their parents, and they are more likely to shoulder more financial risks in adulthood, especially when it comes to saving, planning for retirement and covering healthcare needs. On July 9, the Global Financial Literacy Excellence Center in collaboration with the U.S. Department of Education, the U.S. Department of the Treasury, and the Consumer Financial Protection Bureau hosted the U.S. release of the 2012 Programme for International Student Assessment financial literacy data. The assessment tested 15 year-olds on their knowledge of personal finances and ability to apply it to their financial problems. This is the first large-scale international study to assess the financial literacy of young people.
The government is projecting that the Social Security Trust Fund could run out of cash by 2033. While 19 years might sound like a long time, many of us have clients in their 30s and 40s who want to know that they’ll receive all of the Social Security benefits due to them when they retire. Of course, CPAs and those of us who offer financial planning and estate services caution our clients not to depend solely on their Social Security checks to carry them through their later years.
It’s alarming that the money may, indeed, run out—and even though this news is nothing different that what we’ve already heard about the money—I can’t help wondering how many Americans aren’t familiar with how dire the situation may be.
Have you ever wondered what a day in the life of an auditor will look like in the near future, and how it will be different from today’s practice? Here is a glimpse…
You enter the audit room at 7:30 a.m. on Tuesday morning as the external audit partner of XYZ Enterprises, Inc. After settling in, you sign into AART, the audit firm’s Automated Audit, Reporting and Tracking system that was developed to leverage the widespread availability of information on a 24/7 basis. AART’s technology monitors XYZ Enterprises’ controls, transactions and account balances continuously. As you review the dashboard you notice that all of your audit status indicators are green, except for one. You also notice that you have been copied on a message that AART sent to your controls team notifying them of a modification to a key control parameter in the centralized enterprise resource planning system. You begin looking into the situation.
According to Google, 81 percent of searches for products and services now happen online. By the end of 2015, the majority of web searches will be via a mobile device. Your CPA firm’s website needs to be easily found in search results to ensure you are able to capitalize on this game-changing trend.
Refreshing your marketing to maintain its effectiveness despite the change in how potential clients find your services is not as difficult as you might think. The right approach is to focus on the areas that offer the biggest return and commit to an ongoing improvement program. Your core digital asset is your website. It will deliver the first impression to cold prospects and can reinforce referred prospects’ positive view of your firm. The goal in both cases is to give the visiting prospect a reason to take the next step and contact your firm—lead conversion.
Here are five steps you can take to increase the number of lead conversions from web visitors:
I recently read an article on disruptive innovation that made me consider how much the accounting profession has changed over the years. The article talked about how well some very traditional lines of business are performing, including Swiss watches, independent bookstores and pricey fountain pens, even in our volatile times. These products have enjoyed prolonged success because the business people behind them have emphasized the products’ unique and enduring value, something that the market recognizes even in the midst of continuous change. Swiss watches are seen as quality status products, independent bookstores have positioned themselves as personalized social destinations and fountain pens provide a classic writing experience with a smoother and more professional look than inexpensive and more readily available ballpoint pens.
Is your client’s organization considered a public business entity under the new U.S. GAAP definition? Queries sent to the AICPA’s Private Company Practice Section Center for Plain English Accounting indicate that members continue to struggle with whether or not their entity qualifies to use the Financial Accounting Standards Board’s new Private Company Council accounting alternatives.
Understanding whether a reporting entity is a PBE is the first step in understanding whether it can apply the PCC accounting alternatives. Some of the most common areas of confusion regarding an organization’s definition as a PBE surround broker-dealers, equity-method investments held by PBEs, and governmental units or entities. The following explanations should help to clarify when to use PCC accounting alternatives.
Talented professionals — and the knowledge, passion and dedication they bring to the job — are the lifeblood of any CPA firm or corporate accounting team. For that reason, the AICPA proactively promotes the many benefits of the CPA profession and provides firms and companies with tools that will enhance their recruitment and retention efforts. While interest in the profession is strong, work still needs to be done in some areas, including the recruitment and retention of women and minorities. Although 44% of the accounting profession is female, only 19% of CPA firm partners are women, according to the AICPA’s 2013 Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits study. At the same time, more than one-third of the U.S. population belongs to a minority group, but minorities make up only 10% of the accounting profession. Yet a diverse workforce ensures we have the brightest professionals from the deepest possible talent pool and that we benefit from connections and perspectives that could offer firms and organizations a tremendous competitive advantage.
When I tell people that I work on improving the relevance of corporate reporting, I often get asked about the value of reporting on non-financial information. I remind them that not all aspects of a company’s value can be ascertained from historical financial statements, which is why it’s important to consider a company’s intellectual, human, natural and social and relationship capital in addition to its financial and manufactured capital. In recent years, there has been a shift as investors and other users of corporate reports are beginning to consider more than just financial statements in their evaluations.
When I was in public practice, I audited both small and large entities, in both the public and private markets. Regardless of the client’s size or its stakeholders, the success of an audit depends on the dedicated efforts of numerous professionals. One or two people may oversee an engagement and chart its course, but its ultimate quality reflects each individual’s contribution and how well the team pulls together to maintain high standards. In essence, everyone has to step up to make sure the team succeeds.
The AICPA recently launched its own team effort: the Enhancing Audit Quality initiative. AICPA President and CEO Barry Melancon describes in his recent blog post how this comprehensive, integrated effort is looking at every area that impacts the quality of private entity financial statement audits. (When we talk about private entities, we are referring to all non-SEC registrants, including not-for-profit organizations, employee benefit plans and governmental entities.)
My daughter, her fiancé and I were recently looking for something fun to do in Washington, D.C. As we were poking around, we found a special attraction at the National Building Museum – a maze.
When we took our first steps into the maze, we felt excited but a little apprehensive. We knew there would be twists and turns to weave through. We wondered, would it be easy to navigate or would we get lost in a sea of offshoots and dead ends? But as we made our way through, apprehension gave way to pure fun!
Ethics is on the agenda at the 2014 World Congress of Accountants this November, a good reminder of the global nature of this subject. Every day, accountants in both business and public practice face challenges that require ethical decision-making. At the same time, they must adapt to a changing regulatory landscape, cooperate with government agencies, and respond to legislation on fraud and corruption.
A solid foundation in ethics helps them prepare for the next critical decision. For AICPA and Chartered Institute of Management Accountants members, that foundation has several layers. Each organization’s members must abide by their respective codes of ethics, and, in many cases, licensed CPAs must also follow the ethical standards required by state boards of accountancy. Additionally, all professional accountants working in public practice or in business are required to follow the International Ethics Standards Board for Accountants’ Code of Ethics.
Each year, the AICPA honors our members and other key stakeholders for their contributions to the accounting profession.
In this post, I’ve highlighted a number of recent awards and the impressive contributions of those who have earned them.
Michigan Governor Rick Snyder, CPA, was honored with the Outstanding CPA in Government Impact Award: State Level. The award recognizes CPAs working in state government who have contributed significantly to increased efficiency and effectiveness of government organizations and to the growth and enhancement of the CPA profession.
To lessen the financial difficulties Michigan was going through, Governor Snyder infused his administration with a sense of urgency, saying he wanted to accomplish four years of policy reforms in his first year and then maintain that pace. Under Governor Snyder's leadership, Michigan has eliminated its $1.5 billion structural deficit and produced three balanced budgets. Read more in this CPA Practice Advisor article.
As public accounting is a competitive industry, CPA firms have the luxury of being selective and only hiring the best and brightest. Many firms host early identification programs, which typically take place in the summer and are geared toward freshman, sophomore and junior accounting majors working toward 150 credits. Most firms call them “leadership programs.” These programs typically last one to three days and serve to build relationships early with the top students and hire as interns and then into full-time hires.
Indira Gandhi is elected as the first female Prime Minister of India (Photo credit: Wikipedia)
Indira Gandhi once said, “I suppose that leadership at one time meant muscle; but today it means getting along with people.”
Despite being the first female Prime Minister of India and an extremely influential figure in world history, those close to Gandhi say she felt uncomfortable around educated people because of her own lack of schooling. Despite her persona as a commander, she constantly had to pull from her inner strength and circle of confidants to establish herself outwardly as a leader.
What I draw from this is that leadership and role-modeling in any situation means action, not position. How friends, colleagues, and others perceive us should be centered in our ability to gather the appropriate input to make sound decisions, rather than our need to rely on where we fall in the relationship. However, because of the role modeling we’ve experienced and become conditioned to throughout our lives, many of us think we have to emulate the role of the leader—always decisive and always in control.
If I’m not perceived as a leader and enter into a collaborative situation, I may come across as weak. While that may be the general belief, is it accurate?
The nature of the finance function is evolving and combined with the business environment being highly volatile, uncertain, complex and ambiguous, the need for an agile and robust finance function is all the more critical for business success.
How finance takes on this broader role in serving the business in the future has implications for the types of skills needed and the development of those skills. Management accountants can get an in-depth look at these skills, and assess where they stand by using the CGMA Competency Framework. The framework is designed for CGMA designation holders, but is unlocked on CGMA.org and available for download and use by all finance professionals, their employers, HR professionals and educators.
If you are a CPA who audits employee benefit plans, you understand how complex they can be. You know how critical it is to make certain that you and your staff have all of the knowledge and resources you need to perform quality audits in this area. Luckily, the AICPA has several resources available to assist members in performing EBP audits.
One such resource is the Center for Plain English Accounting. I am the director of the newly launched CPEA, the AICPA’s national A&A resource center for Private Companies Practice Section member firms. Members can submit written questions to the CPEA and receive written responses and gain access to reports, alerts and webinars on A&A topics including EBP, revenue recognition and Private Company Council accounting alternatives. Watch the video below for more information on CPEA.
<!-- End of Brightcove Player —>
Every month, the CPEA receives many types of A&A inquiries. However, in the summer, we receive a higher number of EBP audit related queries because many companies receive tax extensions that delay the deadline for companies’ Form 5500 and audited financials for EBP until October 15.
Each query—and the CPEA’s response to that query—is unique in itself, because plans vary from organization to organization. Therefore, it is not a one-size-fits-all area. That is why it is so important for practitioners performing EBP audits to know where to go to find the right answers.
For example, we recently received the following query from a CPEA member:
For an employee benefit plan where there are no uncertain tax positions, would the plan be required to disclose, by year, each year that remains subject to examination by major tax jurisdictions? Alternatively, could we go with a more general note disclosure?
We suggested a more detailed disclosure, which might say something like “The Plan is subject to audits by the IRS; however, there are currently no audits for any tax periods in progress. The Plan’s management believes it is no longer subject to income tax examinations for years prior to 20X0.”
Even though the entity does not have any tax audits in process, it is helpful for users to understand which years might still be subject to examination by the Internal Revenue Service. Many times these disclosures can be overlooked where an entity has not been subject to IRS audits in the past or does not hold any uncertain tax positions.
Another question we are asked:
Does a successor auditor in a limited scope audit have to comply with the requirements in AU-C section 510 of the professional standards related to obtaining information from the predecessor auditor?
Our answer? Yes. An auditor still needs to comply with AU-C section 510.
Simply put, EBP is not an area to enter into lightly. I cannot stress enough the importance of tapping into the right resources that specifically address EBP so you can provide quality services to your clients. The AICPA has a number of resources that provide key assistance for EBP auditors. Here are three additional ones you should know about and keep on hand, if needed:
The AICPA’s EBP Audit Quality Center. EBPAQC membership connects you to a community of peers through a membership center with tools and resources, regular e-alerts, a dedicated website with a robust member forum that keeps you abreast of the latest Department of Labor, accounting and auditing developments affecting your EBP audit clients.
AICPA EBP Publications. The Employee Benefit Plans: Audit & Accounting Guide and the Accounting Trends & Techniques: Employee Benefit Plans are targeted toward practitioners auditing in this area.
Conducting EBP audits can be a growth area for CPA firms. However, these specialized audits involve a level of knowledge and experience that requires dedication and diligence.
If you’re just getting your feet wet in the EBP audit world, I encourage you to avail yourself of the additional assistance and resources offered by the AICPA.
Robert Durak, CPA, CGMA, Director, Center for Plain English Accounting, American Institute of CPAs. Bob is the AICPA’s lead staff person on accounting and attest matters affecting private companies. Prior to joining the CPEA, Bob led the AICPA's development of the Financial Reporting Framework for Small- and Medium-sized Entities and speaks frequently across the country about private company financial reporting.
I often meet CPAs who are committed to enhancing their practices but are missing crucial intelligence that would allow them to benchmark their results against those of similar firms. If you could use thorough and meaningful data on how you compare with the competition, but you’re not sure how to get it, the AICPA PCPS/TSCPA National MAP Survey is your answer. The profession’s premier benchmarking study, which remains in the field until July 31, the National MAP Survey, offers participating CPAs a comprehensive platform to perform a personalized diagnostic review of their firm every two years, deriving important takeaways. The new dynamic reporting options make it easy to download reports in a variety of modes, including Excel, PowerPoint and PDF files, based on each firm’s needs.
The role of finance teams is expanding well beyond traditional accounting and financial reporting to encompass areas such as IT development, cyber security and strategic business planning. That’s according to a recent survey of CEOs, CFOs and other senior level Chartered Global Management Accountant designation holders. In addition to growth in the role of accounting and finance, the survey - conducted by the AICPA - found that business complexity has been increasing significantly, a trend that is expected to continue in the coming years.
With a new leadership team in place, the Internal Revenue Service Exempt Organizations Division has swiftly come together to introduce a shorter and easier application form (Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code) for organizations seeking section 501(c)(3) tax-exempt status. The IRS estimates up to 70% of all applicants will qualify to use the new streamlined approach.
Prior to the form’s July release, Tamera Ripperda, IRS Exempt Organizations Division’s newly appointed director, shared insights with CPAs at the AICPA Not-For-Profit Industry Conference and explained the significant role the simplified form will play in the new IRS transition process her team has internally dubbed: “Moving Exempt Organizations Forward.”
We’re halfway through the year and while there are many areas you can focus on to further develop your CPA practice, now is a great time to think about how you’re marketing your firm. It’s natural to think that effective marketing requires a commitment of extensive resources, but that isn’t necessarily true. A corporate blog is a marketing vehicle that can be managed by your existing staff.
A blog offers many opportunities: it allows you to demonstrate the expertise of you and your staff; it lets you showcase your values as a firm and convey your firm’s personality so you can attract the “right” clients; it allows you to answer frequently- asked questions and introduce potential clients to your staff. Another big advantage of blogging is that it can help your firm rank higher in search engine results.
No matter what you might have heard about the risks and long-term value of bitcoin, chances are good that your clients and employers will want to know more about how the adoption and use of digital currencies as a means of commerce may affect the way they do business.
Although bitcoin is still very much in its infancy, its impact should not be underestimated or ignored just because it is new and somewhat mysterious. Described by bitcoin.org as “a consensus network that enables a new payment system and a completely digital money,” bitcoin is not the only digital currency in today’s market. In fact, according to Coinmarketcap.com, there are 303 digital currencies in at least 637 markets, with trendy names such as “Litecoin,” and “Darkcoin.”
Chocolate is actually good for us? A glass of red wine per the doctor’s orders? These are just a few examples of seemingly incompatible matches that come together to deliver the most unexpected benefits. Balancing work commitments and a lifestyle that builds a healthy mind and body can be surprisingly symbiotic.
There’s no shortage of research reports and studies advising us of the need to exercise regularly. On the other hand, job responsibilities continue to broaden due to higher performance standards and greater unpredictability in the marketplace.
Due to the American Taxpayer Relief Act of 2012 and the net investment income tax, many clients have no doubt experienced the impact of the new multi-layered tax environment. According to a panel of leading CPA financial planners, clients ranging from those with high net worth to those with middle income were shocked to be hit with the NIIT and higher tax rates this tax season, and have been receptive to proactive planning to mitigate in future years.
Consequently, 2014 is the year to sit down with your clients and provide proactive guidance, education, planning and expertise. Here are a few helpful tips from our panel of experts to help you do that.
While workplaces have become increasingly less formal and more business transactions are taking place outside traditional office settings, the line that separates business from personal can blur. It is important to maintain a certain level of workplace decorum, whether you are in the office or out at an office mixer. Be sure to observe the following pointers, which address a variety of scenarios:
In-person meetings. How you conduct yourself during an in-person meeting will leave a lasting impression on your boss and colleagues.
Be considerate of others’ time and communicate the purpose, duration and the items for discussion in advance. Thank attendees for their participation, and demonstrate your appreciation by promptly circulating a recap or minutes that document their contribution.
Don’t monopolize the conversation. Ensure that everyone has had a chance to speak their mind before ending the meeting.
Never assign an action item to someone not present until you have had an opportunity to negotiate it with them.
If you are attending another person's meeting, be respectful and resist the urge to multi-task. If you are waiting for an important phone call, turn your phone to vibrate or silent, and excuse yourself before answering. Otherwise, turn your devices off.
Regardless of the size of your business, somebody should be responsible for maintaining your company's fixed asset or depreciation schedule. Since in most cases this is not a full-time job, it may be neglected. Updating accounting records is unavoidable for most of us. However, many of us are incredibly busy. Who has time to pull out a fixed asset list - just to make an addition? If your company is large enough to employ an asset manager, you may be up to speed with fixed assets. If not, who is responsible for managing this schedule and do they have the information they need? New tax regulations that went into effect Jan. 1 allow organizations to go back and write off those assets on the books that are long gone. The regulations even allow for partial dispositions of "units of property" that previously were not permitted.
Many preparers and practitioners have been anxiously awaiting the new, converged revenue recognition standard for quite some time. The standard was released by the Financial Accounting Standards Board and the International Accounting Standards Board on May 28. How can we prepare for a smooth transition to the new standard? What major changes will we encounter as we begin implementing it? The new standard is principle-based, which is a big shift from the industry-specific guidance we have today. In preparation for this change in approach, the AICPA has established 16 industry task forces which are developing a new accounting guide containing helpful tips and illustrative examples for applying the new revenue recognition standard.
As the co-chairs of the Construction Contractors Revenue Recognition Task Force, we have been thinking about our major implementation issues for a while now. Here are our top 12 concerns so far.
In an ideal world, we would all be judged on merit, and managers, co-workers and clients would take the time to get to know us before formulating an opinion. Unfortunately, in the time-crunched real world, we don’t always have that luxury. People often make flash assessments based on limited interactions, or piece together opinions about our ability and professionalism from disparate impressions gleaned from superficial encounters. Alas, when it comes to others’ perceptions of us, the devil is in the details, providing us limitless opportunities to make a bad impression.
That’s where etiquette can help. Whether you are collaborating with co-workers, schmoozing potential clients or trying to impress the boss, relationships are critical to your career success. The diversity of the modern workplace and the hurried pace of business provides ample room for social missteps, but adhering to the basic tenants of business etiquette can insulate you from the most egregious offenses.