Trends and Hot Topics Feed

trends and hot topics

Covering a wide array of topics, Trends and Hot Topics keeps an eye on what is new in the CPA profession and around the world.

 

 

 

 

 


 

Decoding the Gray Areas

Ethics-moral-principlesSuppose you are the owner of a convenience store. You purchase newspapers at a fair wholesale price from a man named Harry. Each morning Harry delivers a stack of newspapers to your shop by 6:30 a.m., prior to the morning rush.

At 6:00 a.m. one morning you are walking in your neighborhood and see Harry taking a stack of newspapers from a corner.  Harry places the papers in his backpack and continues on his way.

Soon after, Harry arrives at your shop to make his usual delivery. Should you continue your business with him now that you have observed him taking those newspapers?

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Audit Quality Drives Continued Audit Relevance

Business-peopleAuditing is at the very core of our profession; only CPAs are authorized by law to conduct financial statement audits. In today’s business environment, entities are increasingly interdependent and information and accountability have assumed a larger role in society. As a result, the CPA’s independent audit of an entity's financial statements is a vital service to investors, lenders, sureties, businesses, regulators and other participants in the marketplace. Mergers, acquisitions, the capital markets and credit sources depend not only on the information that management provides in financial statements, but also on the CPA’s audit opinion as to whether the financial statements are free of material misstatements, whether caused by error or fraud.

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10 Years in the Making: The New Revenue Recognition Standard

It’s here! The new revenue recognition standard, that is. I believe it is the most pervasive and across-the-board important topic that the Financial Accounting Standards Board and the International Accounting Standards Board could have tackled. This new standard eliminates the transaction and industry-specific guidance found in current U.S. GAAP and replaces it with a principle-based approach. Also, it applies to all public, private and not-for-profit entities. I implore you, no matter what your professional discipline, to pay attention to this new standard.  And please, don’t get comfortable because the effective dates seem far off.

Are you sure the final words in the new standard are consistent with what you have been hearing to date about this project? Are you comforted in having specific revenue recognition rules replaced by a more principle-based approach?  Are you confident that unwritten industry norms of accounting practice formed over decades are consistent with the new standard? In this video, AICPA Senior Technical Manager for Accounting Standards Kim Kushmerick provides an overview of the standard, in addition to highlighting key items to consider and helpful AICPA resources.  

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Crowdfunding’s Impact on the Finance Sector

Crowdfunding-intlCrowdfunding is a popular but complex term. To some, it refers to a large campaign to raise money for charity. To others, it involves pre-ordering products that will be financed by the received contributions. Another form is equity crowdfunding, also known as crowd investing.

The concept of crowdfunding is not new. For hundreds of years, similar local models included citizens of a village or town have coming together to fund a project. These days the Internet makes it possible to operate similar models on a larger scale. It is an effective, transparent and democratic model to raise financing.

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Celebrate Memorial Day by Giving Back

Memorial-dayMany service men and women encounter challenges upon returning from active duty, including finding employment. Starting a business is an attractive option, but like many entrepreneurs, veterans need support. The good news is that CPAs are in a great position to offer help.

Thanks to the Veteran Fast Launch Initiative, U.S. veterans have the opportunity to gain free help from experts. Through AICPA’s partnership with SCORE, an organization that provides mentoring and training to entrepreneurs, this program connects veterans with CPAs across the country. CPA volunteers provide up to five hours of free financial advice to veterans on starting and growing a business.

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AICPA 2014 Spring Governing Council #AICPAGC14

The AICPA governing Council’s spring 2014 meeting is taking place this week, May 18 to 20. Focused on the profession’s future, the governing Council will discuss topics such as future learning opportunities and continued audit quality. AICPA leaders from each of the 50 states and U.S. territories are attending the meeting. You can follow along with Council action with the hashtag #AICPAGC14 or view the stream below. (Email subscribers can view the stream on our website.)

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Crowdfunding Isn’t Like Shopping Retail

In our last blog post on crowdfunding, Charles Landes, CPA took a deep look at equity crowdfunding, specifically how the Securities and Exchange Commission rules are shaping up as required by the Jumpstart Our Business Startups Act of 2012. However, equity crowdfunding is not typically one’s first introduction to this new funding approach. Many are first introduced to crowdfunding through one of the various crowdfunding platforms that exist, such as Kickstarter. If you are not familiar with crowdfunding through a platform like Kickstarter, the concept is relatively simple. A person or company comes up with an idea, determines the cost to create this idea and sets a funding due date. Projects also feature rewards based on the contribution, for instance, backers may receive a T-shirt or the actual product they are supporting. If the project fails to meet its finance goal by the set date, then the project is not funded.

Backers have funded all types of projects, from virtual reality systems, like Oculus Rift (which was recently acquired by Facebook), to dream cars, like a DeLorean Hovercraft. Other projects have gone on to win an Oscar and be featured at the Cannes Film Festival. However, not every project makes it. What happens when a funded project fails to deliver on its promise?

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A Business Model with No Managers? Yes, it Works

Lone-businessmanThere’s a lot of talk within public accounting about altering the existing business model to adapt to a changing marketplace and the evolving needs of our clients and staff. At my six-person firm, we decided to take a leap into the future by completely rethinking our business model. In July 2012, we went from a traditional firm—one with an office and a hierarchy—to a digital practice where there are no managers. Virtual means a lot of things to different people, and for us it meant closing our doors on our traditional office location. We tried it as an experiment beforehand, and it worked so well we decided to switch completely.

At the same time, we also instituted a Results Only Work Environment, in which we rate performance, not attendance. For us, that also meant doing away with the management structure. I lead the firm and set our future direction, but I don’t know what anyone is doing throughout the day. In fact, no one oversees what our team members do all day—or tracks their vacations or time off--as long as they achieve the required results for the firm.

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IRS E-Services: Where are We Now? And Where are We Going?

QuestionsAs the staff liaison for the AICPA’s Internal Revenue Service Advocacy and Relations volunteer committee, I am in the unique position to listen to our members’ concerns and discuss those issues with the IRS.  When the online e-services of Power of Attorney and Electronic Account Resolution were terminated on Sept. 2, I heard concerns from numerous practitioners.  In fact, we received more calls regarding this issue than all other issues combined last year. 

The AICPA adamantly voiced members’ frustrations and concerns to the IRS.  The backlash the IRS felt from the AICPA and other members of the practitioner community was so severe that IRS officials made it clear they never wanted this situation to repeat itself.  This was a top priority to then-Acting Commissioner Danny Werfel.  The IRS also quietly looked into different possibilities to bring back these online e-services.

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Want to Focus More? Stop Multi-Tasking

Multi-taskingI confess: I am a multi-tasker. At any one time, I am working on 10 different projects, planning what to have for dinner, looking up which movies are playing and pondering what really happened to Eddie Wilson of Eddie and the Cruisers. You probably have similar habits and consider yourself a multi-tasker. We wear this label as a badge of honor. And who can blame us? Technology has made it so easy to multi-task.

Nevertheless, how many times do you intend to check the weather on your smartphone, only to be distracted by another app? Then you get a text message, which leads to an app notification and pretty soon you’re looking at cat photos on Facebook, forgetting all about the reason you picked up your smartphone to begin with (it was to check the weather, in case you forgot).

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5 Key Regulations to Get Right in Crowdfunding

Crowdfunding-keyFrom the newest design inventions to the Thai food truck that showed up in your town last week, the crowdfunding movement is allowing individuals to unleash their entrepreneurial spirit and turn their dreams into reality. By sharing their ideas on the web, users can raise funds to support the launch of their small businesses.

Numerous crowdfunding platforms exist, many focusing on the type of project being funded. For example, certain platforms serve non-profits and philanthropic causes, music, theatre, small business and so forth. Even with such specialization, investing comes with risk. Crowdfunding indeed opens investment opportunities to a new pool of potential stakeholders.  Many of those investors may not fully understand the risks involved. During the next few weeks on AICPA Insights, we will look at the benefits and risks of crowdfunding.

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3 Tips to Find Your Professional True North

CompassFinding your professional true north, a path you can be passionate about and one that will provide you with direction in the future, is attainable – when you have the right navigation. Whether it is honing your personal skill set, positioning your practice for growth or transforming your organization’s technology infrastructure, it is important that you be the navigator. There are endless possibilities to explore, pursue, master and achieve, and it is important you arrive exactly where you want to go.

Keep in mind that finding your way often means asking for directions and talking with others who have already arrived at your desired destination. They can tell you what is not on the map and the best roads to follow to enhance the quality of your journey. Here are three quick tips to find your professional true north:

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Volunteer This Financial Capability Month

Volunteer-april
April is National Financial Capability Month, an annual event designed to help Americans improve their understanding of finances. As a CPA, you can significantly increase its value and impact, and help ensure the month is more than just a reminder to consumers to save and spend wisely. When you get involved, you can:

  • Help Americans build their financial understanding and capabilities
  • Strengthen and advance the CPA profession
  • Give young CPAs an opportunity to develop leadership skills
  • Volunteer and build your network at the same time

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The Many Advantages of Defining Your Firm’s Value

Business-meeting

It all began when I did some research on how our firm members could better understand their worth and confidently present their value to clients and others. We settled on an approach in which participants answer questions about who they are, what they do, how and why they do it, what sets them apart and why clients should do business with them. You’d be surprised at how much you can learn by really considering the answers to such seemingly simple questions.

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3 Succession Planning Tips from Comedy’s Best

The AICPA hears a lot from CPA firms that are in need of a succession plan, and challenged by acquiring new talent or engaging the next generation of staff. In figuring out how to leave their firm in good hands, I think the profession can learn many lessons from today’s comedy leaders like Lorne Michaels of NBC’s Saturday Night Live, Jon Stewart of Comedy Central’s The Daily Show and Harold Ramis, as Bill Sheridan pointed out in his Feb. 26 post on CPA Success. They’re working a smart succession planning model. They each gather together a group of gifted staff and give them the opportunity to develop their strengths, making for some very valuable broadcast properties.

Through SNL, Lorne Michaels has nurtured a long list of actors who went on to movie or television stardom after cutting their teeth on the show, including Chevy Chase, Bill Murray, Billy Crystal, Eddie Murphy, Julia Louis-Dreyfus,  Jimmy Fallon, Tina Fey and Amy Poehler. Daily Show alumni Stephen Colbert and John Oliver each have their own shows, and Steve Carrel has had both television and movie hits. A lot of talented people have left each program, but that’s alright because the shows’ successes—and the achievements of their alumni—attract new generations of promising young people who want to come on board.

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Data Analysis Expressions: PowerPivot’s Secret Weapon

PowerPivotIn my last blog post, I expounded on the value of Excel 2013’s new feature: PowerPivot. However, this new feature has a secret weapon that makes PowerPivot even more valuable for the power Excel user. DAX is easily the best feature of PowerPivot. DAX stands for Data Analysis Expressions. DAX formulas are created in the PowerPivot window using the xVelocity in-memory analytical engine, which executes DAX code. DAX enables the Excel user to create formulas that consist of more advanced calculations that work on data stored in multiple tables. The use of DAX formulas also supports the creation of self-service business intelligence solutions in Excel.

There are two types of DAX formulas: calculated column and calculated fields (also known as measures). In order to understand DAX formulas and their capabilities you have to understand the term evaluation context. In any DAX formula, the evaluation context is applied first in the formula and then the aggregation takes place on the evaluated context. Context is what makes it possible to perform dynamic analysis with DAX formulas.

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Working Late? Think Twice Before You Order Dinner

Healthy-eatingIt is no secret that CPAs have been working longer hours since busy season started. Moreover, you will probably continue to do so for a few more weeks. In order to keep up the pace, you should take time to refuel, both mentally and physically. Unfortunately, skipping meals or opting for delivery often becomes the norm.

According to a recent Seamless Brain Food Survey, the first quarter of every year is a peak time for corporate food orders at accounting firms where 4 p.m. orders are 4.5 times higher than in the second and third quarters. Office food orders are on the rise as well – suggesting that CPAs are working longer hours due to increased client demands and increased complexity of tax laws and regulations. . In fact, food orders at accounting firms in 2014 are already 17 times higher than normal. 

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Trumping the Patent Trolls

Patent-stampEver found yourself wondering why all the fuss over patent trolls? Aren’t patent holders entitled to invention protection and the right to license their discovery to others who manufacture and sell it? Of course. But, in a disturbing trend, many patent assertion entities – better known as patent trolls – are using litigation to wrongfully target end-users of such products. 

If, for example, your office has a copier with a “scan to email” function, your company or employer could be at risk. As holders of vague patents, some PAEs have sent letters to small businesses, demanding approximately $1,000 per employee for the use of such scanners. The demand letter’s message: settle or be sued. Most choose to settle, primarily because of concerns about the cost of a defense.

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Re-envisioning the CFO as the Chief Future Officer

Chief-future-officerAre you ready to be the chief future officer? That is what I imagine to be the ultimate role of today’s CFO, someone who offers the kind of multifaceted, high-end skills that organizations can use to achieve their strategic financial goals and drive innovation.

The role of the CFO is already undergoing rapid change. In fact, 66% of global CFOs don’t believe the current definition of that title adequately captures the diversity of their position, according to an Ernst & Young study. Finding the skills needed to move an organization forward is going to be an ongoing challenge, however. In an Accenture survey, 40% of decision makers in Europe believed that the future success of their organizations depended on high-end analytical skills, but only 15% said they had these skills. So-called soft skills are also vital. IBM research has found that CEOs believe the critical skills for future success are being collaborative, communicative and creative.

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Happy St. Patrick’s Day – The Luck of the Beer Tax Continues

LeprechaunIt should surprise no one that the amount of Guinness consumed worldwide on St. Patrick’s Day more than doubles, to approximately 13 million pints. Celebrations are held far and wide from Australia to Russia to the International Space Station, where astronauts like Catherine Coleman play Irish music in space.

As a Maloney and a Fitzpatrick, I love the idea of a global Irish celebration - makes the world feel a wee bit friendlier (even if the saint being honored is technically Scottish).

The U.S. accounts for much of the increase in St. Patrick’s Day Guinness consumption. But while the enthusiasm may be spread out across the  country, the excise tax on beer collected by each state varies considerably.

The map created by the Tax Foundation shows an interesting pattern - a low-tax band across the middle of the country, with a few Western states collecting the least, while southern states charge the most, with Tennessee coming in first at $1.17 per gallon. The Mid-Atlantic area defies categorization – my state of Virginia is in the middle but neighboring Maryland ranks much higher.

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The Urge to Merge Continues

With 2013 in our rear view mirror, many want to know what the merger and acquisition marketplace will look like in 2014. I have been involved in anywhere from 75 to 100 M&A deals a year over the last 4-5 years, and over 1000 deals since 1990. My firm’s involvement may include deals which we develop ourselves, or deals in which we are brought in to consult upon.

What we’re seeing is a very steady M&A market with potential for growth in the future. With baby boomers gearing up for retirement, the M&A market among CPA firms could certainly heat up and my firm is fielding a number of calls from practitioners looking for guidance.

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Capturing Online Sales and Use Tax: The Battle Continues

EcommerceHave you purchased something online this past year, month or day?  You probably looked at the cost of the item purchased, but did you pay attention to whether you paid taxes on your purchases?  Sorry to tell you this, but just because a sales tax was not charged does not mean you don’t owe a tax on the transaction.

All states that impose sales taxes also require purchasers to remit use tax on any taxable purchases if sales tax is not paid. Many, if not most, consumers are unaware of the use tax and, therefore, do not comply.  It is almost impossible for state taxing authorities to enforce these laws with respect to individual consumers (but businesses often are audited for use tax). 

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PowerPivot: A Game Changer for Excel Pivot Table Users

PowerPivotAs a CPA and a power Excel user, my goal in Excel has always been to create useful reports and analysis for audit documentation as well as to meet my client’s need for information and reports. I quickly discovered that the best tool in Excel to meet my goals was to learn and master the capabilities of pivot tables. Learning pivot tables has increased my efficiency in almost every project that I have worked on and has been the tool I most often turn to in order to complete projects in a timely manner.

As great as pivot tables are they do have limitations, for example pivot tables do not work with data sets larger than one million rows. Pivot tables also can only work on one data set at a time. If I want to create a single report from multiple data sets, I must use V-Lookup formulas. If I want to perform calculations in my pivot table, I must use Calculated Items and Calculated Fields, which are cumbersome to work with and are not well supported by the Microsoft team.

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Second Screen Gold: #Sochi2014

Olympics-sochiSocial media has the power to connect people across the globe who are interested in a common topic. Over the past few weeks, millions of users flocked to social media to share insights about the 2014 Winter Olympics in Sochi. 

As with other high-profile televised events, using social media gave viewers the opportunity to create a very interesting ‘second screen’ experience during the Olympic Games.  According to Mashable, the term ‘second screen’ refers to “…the use of an additional monitor (e.g. tablet, smartphone) while watching television. It allows the audience to interact with what they’re consuming whether it’s a TV show, video game or movie.”

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A Look Inside the Oscars

Oscar-statueWe are now a couple days away from one of the most watched and tweeted awards shows, the Academy Awards. Earlier this week the AICPA's CPA Letter Daily polled its readers to see which movie they thought would win the Best Picture Oscar. “12 Years a Slave” was the top vote getter, with 31.71% of the vote. Coming in next was “American Hustle” (19.59%) followed by “Gravity” (13.79%). We will just have to wait and see if the readers predicted correctly.

A highlight of most award shows, at least for CPAs, is not necessarily who won what or what they were wearing, but rather those 30 seconds of fame for the CPAs featured on stage during the national broadcast. Most years the CPAs wave from the stage, sporting briefcases embossed with their firm’s name. However, some years, they get a slightly different mention, as the cast of “The Big Bang Theory” gave CPAs two years ago at the Emmys.

In January, PwC, which has overseen the balloting process for the Oscars for the last 80 years, announced that Brian Cullinan, CPA, chair of PwC’s U.S. board of partners and managing partner of PwC’s Southern California practice, joined the leadership team managing the 2014 balloting process alongside Rick Rosas, CPA. They will be the only two people in the world who know the identities of the Oscar winners before they are revealed on Sunday.

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Hidden Traps for Small Employer HRAs in 2014

Surprised-businessLike many small employers with under 50 full-time equivalent employees, I thought my company would be relatively unaffected by the Affordable Care Act. I was surprised to discover that my company Healthcare Reimbursement Arrangement is legal, but is now completely unworkable.

I have offered for several years to full-time employees a standalone HRA for which they get pre-tax reimbursements for out-of-pocket medical expenses and health insurance premiums, up to the annual predetermined dollar limit. HRAs generally fall under Code Section 105(b) and are considered employer self-insured accident or health plans. By design, HRA plans have dollar limits on annual and lifetime benefits provided to participants. However, to be a qualified group health plan in 2014, the plan must provide minimum essential health benefits without annual or lifetime dollar limits. My company’s HRA fails to meet this basic requirement. 

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A Golden Opportunity: Performing IPSAs of Conflict Minerals Reports

Mound-of-goldHave you read about conflict minerals in the news? Apple Inc. recently stated in its supplier responsibility report that the company’s entire supply of tantalum used in its products was verified as conflict free, as reported by the Los Angeles Times. The report also noted that “we’re pushing our suppliers of tin, tungsten, and gold just as hard to use verified sources.”

This news relates to the U.S. Securities and Exchange Commission’s final rule issued in August 2012 which required public companies to disclose their use of “conflict minerals” in their manufacturing processes and supply chains. The term “conflict minerals” describes certain minerals—tantalum, tungsten, tin and gold—that are mined in the Democratic Republic of the Congo and its surrounding areas. Public companies might be required to file a Conflict Minerals Report, which may also be subject to an Independent Private Sector Audit. As a CPA, you are the premier provider of such an audit and the AICPA provides resources to help with inquiries you may be receiving from your clients.

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How Would a U.S. Bitcoin Transaction be Taxed?

Accepting-bitcoinsOverstock.com, the Sacramento Kings and a few countries have all taken positions on what they will do with Bitcoins.  The two major Bitcoin positions are treatment of it as property, as Singapore has recently adopted, or as currency, as Germany has chosen.  

Much has been written on the creation of the Bitcoin, and its rise in popularity – and value – from 5 cents in 2010 to over $1,200 in 2013.  Bitcoins were born from combining electronic commerce and communications with mathematics, cryptography and privacy – as they only exist when your computer is functioning (or your iPad, smartphone, tablet, smart watch or Google glasses!), and they have no intrinsic value, save for what value people are willing to give.

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Downton Abbey’s Death Duty Explained

Highclere CastleHighclere Castle (Photo credit: Wikipedia)

Spoiler Alert: This blog post contains spoilers if you have not seen the first episode of season four of “Downton Abbey.”

“Downton Abbey,” the British period drama that takes place in the early 1900s, has made death taxes… fun. If you are not familiar with the show, I will set it up for you. The Crawleys are part of the British aristocracy as the Earl and Countess of Grantham. Robert Crawley is the fifth Earl of Grantham and has only one heir, Matthew Crawley. Matthew is Robert’s third cousin, once removed (at this time in history, women still could not inherit property or title). In season three, Matthew marries Mary, Robert’s daughter, to keep the estate, title and money in Robert’s direct line of descent. Almost immediately after the birth of Matthew and Mary’s son, Matthew dies in a car accident.

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Super Bowl Was More than Just a Game to Celebrate

Super-bowl-xlviii-logoYesterday’s Super Bowl was a chance for players and fans to celebrate the culmination of another great season. For the past three years, CPA Letter Daily readers have been asked to pick the winner of the Super Bowl. Readers correctly predicted the winners in 2011 (Packers) and 2012 (Giants), but not for 2013 (readers selected the 49ers over the Ravens). This year CPA Letter Daily readers overwhelming chose the Denver Broncos as the Super Bowl champions (73.34%). Unfortunately, their prediction was wrong as the Seattle Seahawks trounced the Broncos.

Super Bowl XLVIII was more than just a triumph for the Seahawks. It also was a celebration of a number of football firsts. It was the first Super Bowl to be held outdoors in a cold weather state, to be hosted by two states and to have a majority of attendees arrive via mass transit.

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In the News: The State of Accounting Jobs

We-are-hiringI don’t really recall my mindset when applying to college (it’s been more than five 15 years), but I can confidently say I should have spent more time thinking about my future employment prospects. Planning ahead would have allowed me to spend less time in college worrying that it would be difficult to find a job related to my major.

Luckily for high school students interested in accounting and college students planning to become CPAs, the job-related news about the profession lately has been very positive.

According to data from a survey conducted in November 2013 by the National Association of Colleges and Employers, 61% of accounting majors from the class of 2013 had received at least one job offer – the third highest percentage of any major.

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Super Bowl’s Hidden Treasure… the Jock Tax

Super-bowl-hotelAs the focus here in New Jersey switches from “Bridgegate” to “tailgate,” we think about the things that we love best about the Super Bowl. A few of mine include eating wings, drinking beer and, of course, watching those witty commercials. However, as the players gear up to battle the elements this week, one other thing separates this Super Bowl from the others: the proverbial taxman. Many states impose an income tax on nonresidents’ earnings and New Jersey is one of them. To professional athletes, it is known as the “jock tax.” 

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Interview with Team Who Wrote Net Investment Income Tax

Bob Keebler interviews David Kirk and Adrienne Mikolshek, part of the team who wrote the Net Investment Income Tax regulations, to help members understand the new IRS Form 8960, Net Investment Income Tax for Individuals, Estates and Trusts and the draft instructions. Access more resources in the Planning After ATRA and NIIT Toolkit, including more podcasts, a customizable letter to send to clients to illustrate why it is important that they meet with you and new charts by Bob Keebler as well as webcast recordings and Forefield Advisor alerts/videos and the complete four-volume set of The CPA’s Guide to Financial & Estate Planning, recently updated for ATRA and NIIT and much more.

Interview with David Kirk and Adrienne Mikolashek

 

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Explore the New IRS Form for Net Investment Income Tax

Bob Keebler goes line by line through Form 8960, Net Investment Income Tax for Individual, Estates and Trusts, to help members understand key elements they need to know for tax season. Access more resources in the Planning After ATRA and NIIT Toolkit, including more podcasts, a customizable letter to send to clients to illustrate why it is important that they meet with you and new charts by Bob Keebler as well as webcast recordings and Forefield Advisor alerts/videos and the complete four-volume set of The CPA’s Guide to Financial & Estate Planning, recently updated for ATRA and NIIT, and much more. (Email subscribers can listen to the podcast on our website.)

IRS Form 8960 Draft Instructions

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Get “Unstuck” in 2014

Fish-getting-unstuckLike so many of you, I am passionate about both leadership and learning. Recently, the thought struck me that on occasion, my desire for personal and professional growth might actually get in the way of my leadership and learning.

I’m sure you can relate to the feeling of “sprinting to the finish” on various projects. But how often do you really feel like you’ve reached the finish line? Instead, what if we’re actually like hamsters on a wheel, essentially stuck in one place? This was an “ah ha” moment for me—a realization that my logical mind had some trouble laying bare.

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How CPAs Can Prepare Clients for Healthcare Reform

Health-care-fileCurrently, there is a massive amount of confusion in the business community and among consumers – the very same people that are CPAs in public accounting’s clients – with the implementation of the Affordable Care Act or Obamacare. Change, of course, creates opportunity, and knowledgeable CPAs can expand their role as trusted advisers by gaining an understanding of the implications of the ACA on businesses and individuals.

The changes in insurance primarily affect two client types: small business and individuals who do not get insurance from their employer. This latter group would include self-employed individuals and their families who do not qualify under the definition of “small business” for purposes of the ACA’s insurance market rules. There are provisions for large employers that go into effect in 2015.

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Women and Leadership: The Path Not Yet Taken

Business-womenWhat are the consequences if organizations aren’t making the most of up to half of their potential talent?  Unfortunately, that’s the case in many firms, according to recent AICPA trends data, which found that the percentage of women in leadership positions in the profession has actually dropped from 23% in 2010 to 19% today. As you can imagine, this trend was a hot topic of conversation at the AICPA Women’s Global Leadership Summit, which was held in Washington D.C. in October. Those who attended the Summit found those statistics particularly troubling because among those present were a number of very talented and vibrant women. If firms and companies are not working to create opportunities for talented women to live up to their full potential, then these organizations are missing out on a lot.

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Trust But Verify – Another Perspective on Comfort Letters

Back in March, AICPA Senior Vice President Susan Coffey wrote about the dangers of providing client comfort letters. Since then, we’ve been hearing from more and more members that they are seeing a rise in requests from third parties for some sort of assurance on client accounting and tax information, or financial condition. I think Edward Karl said it best in CPAs and Comfort Letters: The New Chocolate (from the July edition/DC Currents column of The Tax Adviser) when he described them as requests for “verification, confirmation, certification, corroboration, authentication or substantiation of their clients’ financial information.” You name it, we’ve been asked to validate it. On the bright side, an increase in these requests confirms the faith, confidence and trust that business owners, decision makers and the public have in CPAs.

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Top Blog Posts of 2013: Vote for Your Favorite

Top-10

As 2013 comes to a close, I thought it would be interesting to see what topics “moved” and “shaked” the CPA profession this year. Specifically, we thought you would be interested in the AICPA Insights blog posts that most resonated with you and your peers, as measured by pageviews. Surprisingly, no one particular topic overly dominated this list. Additionally, most of these blog posts originated in 2013, but one actually went live in 2012 and had enough staying power to carry over to 2013. See our top stories and catch up on the year's news below and then vote for the one you like best, or write in your own top choice!

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Hot Topics and FAQs from the A&A Technical Hotline

The AICPA Technical Hotline provides non-authoritative advice to members on matters of accounting and financial reporting, audit, attest, compilation and review service standards. This podcast, the AICPA Insights Live webcast on Nov. 22, addresses some of the more commonly asked questions over the past year in the areas of audit, attest, compilation and review engagements. Highlights include the new clarified audit standards, verification requests, supplementary information and Service Organization Controls reporting. (Email subscribers can listen to the podcast on our website).

Hot Topics and FAQs from the A&A Technical Hotline

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Avoid These Holiday Social Media Scams

Scam-alertAccording to USA Today, the holiday season is a big time for online scams, and this year the focus will be on phones and social media. While most of us can spot spam in our email inbox, social networking scams are becoming more common and aren’t quite as easy to detect. Research shows one in 10 users have fallen for a social media scam. And to be honest with you, I am one of those who have been duped. It seemed so simple: share an image on Instagram, add a hashtag and BAM…free Ray Bans. Needless to say, I never received the sunglasses.  Luckily, I quickly came to my senses and changed my password.

It’s easy to get caught up in a bogus offer, but remember if it seems too easy to be true…it likely is!

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Volcker Rule Could Affect Community Bank's Year End Bottom Line

English: Paul Volcker, former head of the Fede...Paul Volcker, former head of the Federal Reserve Board . (Photo credit: Wikipedia)

On Dec. 10, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Securities and Exchange Commission released their rule “Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships with, Hedge Funds and Private Equity Funds,” otherwise known as the Volcker Rule. This rule has some real implications on the banking industry, including community banks, of which CPAs should be aware.

Under the Volcker rule, ownership interests in covered funds (in other words, investments) will not be permissible and will have to be divested by 2015. Ownership interests in covered funds subject to the Volcker rule include many pooled trust preferred collateralized debt obligations, certain collateralized loan obligations and possibly Real Estate Mortgage Investment Conduits. At this conjuncture, the full scope of investments impacted is unknown.

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Q&A with Barry Melancon, CPA, CGMA, AICPA President & CEO

Q&AWhat opportunities and challenges does the head of the AICPA foresee for the CPA profession in 2014? What were the profession’s significant achievements in 2013? Barry C. Melancon, CPA, CGMA, AICPA president and CEO, answers these questions and offers insights on how the profession will continue to adapt to today’s changing environment, addressing clients’ and employer’s needs. Citing successes with regulation, legislation, recruitment and positioning the profession for the future, Barry strongly believes CPAs will build on a solid foundation.

1. What were the AICPA’s legislative or regulatory priorities this past year and what’s in store for 2014?

We continued to have success in the advocacy area in 2013. In one significant victory for the profession and the public, the Securities and Exchange Commission exempted CPAs from registration as municipal advisers when they are providing certain accounting or attest services. We urged the SEC to exempt CPAs from the definition of municipal advisers after it had indicated that anyone performing accounting services for governments would be defined as a “municipal adviser.” It was critical that our voices be heard on this issue because such a broad definition would have made it more difficult for CPAs to serve governments and potential investors without taking on unnecessary and duplicative costs or compliance burdens.

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CPAs in Business and Industry Optimistic for 2014 Revenue Growth

Revenue-growth-2014The end of the year is always a good time to reflect on the past and consider the future. So perhaps it’s no surprise that the latest AICPA Business and Industry Economic Outlook Survey has inspired me to share some of my reflections and thoughts with you.

Thinking back to the fourth quarter of 2012, CPAs in industry were deeply concerned about the economy, especially with the “fiscal cliff” looming large. Fortunately, we had a last minute resolution to the dilemma on December 31, 2012 and concerns about the overall economy and politics abated somewhat in the first half of 2013. Optimism about the US economy improved, and the number of CPAs saying they were optimistic about their companies and having plans to expand also increased.

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Latest Trends Affecting CPAs

In our last live blog from the 2013 AICPA Insights Live webcast series, Jim Metzler, CPA, AICPA Vice President - Small Firm Interests, Public Practice and Global Alliances, discusses the trends affecting CPAs, the challenges and opportunities practitioners face, as well as best practices being used at successful firms across the country. (Email subscribers: Read the live blog on our website.) Don't forget to register for the last AICPA Insights Live webcast, Worst IT Practices CPAs Can Advise Businesses to Avoid, 1 to 2 p.m. ET on Dec. 20.

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In the News: Year-End Tax Moves for Businesses and Individuals

TaxesAs the calendar turns to December, AICPA experts have been speaking to reporters to educate the public about tax moves they can make before the end of the year. A number of these tips involve tax breaks that will either expire, or whose futures are uncertain and the steps that businesses, individuals and homeowners can take now to save themselves money when they file their 2013 return.

Businesses

Jeffrey Porter, chairman of the AICPA’s tax executive committee, spoke to CFO.com about corporate tax provisions which are set to expire after 2013.

According to Porter, one of the most important of the temporary tax provisions set to expire after 2013 is the 50 percent bonus depreciation, which was enacted as part of economic-stimulus legislation.

“Let’s say you’re a CFO, and you know you need to purchase a million-dollar piece of equipment. If you purchase it before the end of the year, you can get a $600,000 write-off in the first year,” says Porter.

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PCC Standards for Goodwill: What Valuation Specialists Need to Know

Valuation-specialists-goodwillA new standard establishing how private companies account for goodwill is not expected to cause immediate challenges for valuation specialists, but the impact could be more significant if the new rules are adopted for public companies down the road.

The standard is the work of the Private Company Council, an advisory group to the Financial Accounting Standards Board formed last year to address possible necessary changes to U.S. GAAP for non-issuers.  On Nov. 25, the FASB endorsed a PCC proposal to provide alternative accounting for goodwill by private companies. Goodwill typically arises from business combinations. In financial reporting, goodwill is the residual amount remaining after the fair values of all identified assets acquired less liabilities assumed have been subtracted from the acquisition price.

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Running Your Business Like an Olympic Athlete

Turin-olympic-ice-skatersOlympic athletes generally train every day – continuously monitoring their progress to make sure they're performing to the best of their abilities. Can you imagine an Olympic athlete training once a year and then trying to compete against those who kept to a strict, regimented training schedule?  Like top athletes, successful businesses need to keep a constant pulse on how they're doing so they can address what's working and what needs to be tweaked – in order to always be on top of their game.

Companies can add value to their activities by utilizing Continuous Auditing and Monitoring, which is supported by tools and programs that can assist in mitigating risks and detecting fraud. Additionally, Continuous Auditing and Monitoring provides a powerful deterrent to those tempted to commit fraud, as these functions can take place frequently or continuously throughout the year. 

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Will Your Clients or Customers Pay in Bitcoin?

Alternative Currency Could Change Financial Landscape

In celebration of the AICPA’s 125 anniversary last year, we produced a powerful retrospective called Evolution of a Profession. The six-minute video traced the accounting profession’s changes from its origins 8,000 years ago through the present day.

Within that evolution were the notions of currency and exchange. Over time, society has changed the various ways goods and services are purchased. Hard as it may be to believe, at one point the primary currency was clams. The same is true of livestock, land and spices. All eventually gave way to something else as our forms of money have been “refined” over and over again.

Bitcoin Timeline

  • Jan. 2009 - First Bitcoin transaction
  • Jul. 2013 - Thailand officials declare the currency illegal in all its aspects
  • Aug. 2013 - U.S. federal judge rules Bitcoin is a currency
  • Oct. 2013 - $28 million in Bitcoins seized during raid on an online drug marketplace
  • Nov. 2013 - Cyprus’ largest university says it will accept Bitcoin as payment for tuition and school fees
  • Dec. 2013 - China bans the country’s financial institutions from handling Bitcoin transactions

Four years ago, a new alternative currency emerged and the accounting profession needs to watch how it develops going forward. It’s a virtual currency known as Bitcoin. Dozens of virtual currencies exist but Bitcoin has garnered the most attention. The news media has been covering the currency in earnest since the spring, including its growing acceptance among businesses and even a foreign university.

What does that mean for our profession? First, if Bitcoin were to become a mainstream currency option, firms would have to consider clients using Bitcoin as a form of payment for services, and a business might want to accept Bitcoins for purchases of its products.  

More broadly, how might financial statement preparation and assurance on those statements need to adapt? Bitcoin is not only a currency, it is also a commodity – one with a finite supply (currently 12 million units and continually increasing to a maximum of 21 million units).  Therefore, depending on the demand for it at any given time, its value could fluctuate wildly – even within the same day. In 2013 alone, a single Bitcoin unit was valued at less than $20 and hit a high of more than $1,000 in late November. So, how would a CPA value that money, and is it even an asset? And since Bitcoin largely operates through online exchanges, it functions outside of the traditional banking system, where balances and transactions can easily be confirmed.  In terms of taxes, the Internal Revenue Service has said Bitcoin transactions could fall under several categories: property, financial instrument, foreign currency or barter.

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We Give Thanks for These Apps, Blogs and Social Media Tools

Mobile-appsIt’s the season of thankfulness. And adding to the list of family, health and happiness, I’d like to share some of the blogs, apps and social media channels that we really appreciate.  Friends and coworkers helped me compile a list of technology tips and tricks that make work and life a little easier.

Mobile Apps

Dan Nestle, senior communications manager at the AICPA, likes "Flipboard and Zite for news gathering."

Chris Ekimoff, CPA, CFE has two favorites: a travel app, TripIt, and, "of course, Thanksgiving wouldn’t be Thanksgiving without ESPN’s Fantasy Football app."

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