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MACPA PIU - Spring 2011

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What is over the Horizin for the CPA Profession? Tom Hood covers the latest developments in the CPA Profession and looks to the future in this four hour (Free CPE) session for members of the Maryland Association of CPAs. It covers the latest in the four major trend areas of Economic, Politica;/Legislative/Regulatory, Social/Demographic, and Technology. He finishes with tools and resources to help CPAs thrive in the "Extreme Future".

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MACPA PIU - Spring 2011

  1. Tom Hood, CPA.CITP CEOMaryland Association of CPAs
  2. Welcome to the Extreme Future!
  3. 1. Speed – the rate of change will be blinding, comprehensive in scope and touch every aspect of your life2. Complexity – A quantum leap in seemingly unrelated forces converging on everything3. Risk – New risks, higher risks, and more risks4. Change – Drastic adjustments in your work, community & relationships forcing you to adapt quickly to radical changes5. Surprise – sometimes good, sometimes difficult to imagine, surprise will become a daily feature of your life
  4. We feel overwhelmed by the waves of change The 5 C’s• Competition• Compliance• Convergence• Change• Complexity
  5. There is a way out… The tornado of changes from CPA Vision Project circa 2000
  6. We can to learn how to harness thewinds of change, together!
  7. The Power of We!
  8. We can become navigators of change“There isn’t the luxury of time.We used to say, ‘Wait untilthis crisis is over and we get backto normal,’ but that never happens.We have to be ‘change animals.’”- Michele McKenzie, President and CEO, Canadian Tourism Commission
  9. Let’s break it down• Economic• Political / Legislative / Standards• Social / Workforce Demographics• Technology• The Future of our Profession• MACPA resources
  10. Economic
  11. Maryland by the numbers – Unemployment stats 8.5 8.0 7.5 7.0 6.5 6.0
  12. More bright spots
  13. Climbing out faster than most states 2009 versus 2007
  14. Political / Legislative / StandardsMost CPAs feel like this with legislative,  standards & regulatory changes
  15. The (infra) Structure of the CPA Profession Federal & State Laws & Regulations – SEC, DOL, Treasury, GAO, PCAOB CPA Profession Standards – AICPA & FASB, GASB, FASAB, IASB State CPA Statutes (Law) State Boards of Accountancy issue licenses and regulate CPAs
  16. Update on PTIN• Need “new” PTIN before 01/01/2011• Required for Signing Preparer or preparer of  all or substantially all of tax return (major  victory)• Fee is $64.25• Actively Licensed CPAs and staff exempt from  exam• CPAs in industry are exempt from filing for  employers
  17. Health Care & 1099 issue
  18. Where do major changes come from? Most changes come from regulators and standard setters Us – Associations Them – Federal & State Infrastructure MACPA & AICPA legislators OR New laws, regulations & regulators
  19. Recent example – The Dodd – Frank Wall Street  Reform and Consumer Financial Protection Act of 2010Crisis hits news Bureau of Consumer  Financial Protection 848 pages! 533 regulations 60 studies 94 reports
  20. More than 100 MACPA members call our senators and we  defeat the amendment!
  21. “But a time of turbulence is also one of great opportunity for those who can understand, accept and exploit the new realities. It is above all a time of opportunity for leadership.” ‐ Peter Drucker,  Managing in Turbulent Times
  22. What did we do when you were forced to have a license in every state you file A taxes in? WA MT ME VT ND K OR MN NH ID SD WI WY NY *MA MI • Collaborative effort with AICPA – NE IA *PA CT RI NV OH CPA/SEA – NASBA & State CPA CA UT CO IL IN WV DE NJ VA KS HI Societies MO KY NC MD TN DC • 47 states passed legislation in three AZ NM OK AR SC (3) years MS AL *GA TX LA • Maryland enacted it in 2008 FL Awaiting Governor Signature - 1 PR CPA Mobility Legislation Pending - 2 GU U.S. VIRGIN ISLANDS CPA Mobility Enacted 46 * CPA Mobility Enacted Only for Other Mobility States – GA, PA, MA26 In Process
  23. The Federal Issues – more waves of  change• FTC Red Flags rule – privacy  & identity theft• Tax Preparer Registration &  PTIN issue• Patient Protection Act &  1099’s• Tax Strategy Patents• Dodd‐Frank Act• 3% Withholding on Govt Pmts
  24. The State Issues – cascading from the  federal level and revenue shortfalls• Maryland Privacy Act• Maryland Tax Preparer  Regulations• Maryland Consumer  Protection & Debt  Counselors• Sales Tax on Accounting &  Tax Services• Combined Reporting
  25. MACPA 2011 Agenda 5 for 5! Pass 120/150 legislation Stop Sales Tax on Accounting Services Exempt CPAs from Debt Counseling Bill Stop Trial Lawyers attempts at Tort Liberalization – Comparative Fault Pass Safe Harbor legislation CPA Day in Annapolis January 18, 2012
  26. How we did it
  27. Looking ahead to 2012• Special Session to deal with redistricting (and budget) – will see tax proposals• Sales Tax on Services• Combined Reporting• Comparative Fault = increase liability• Quid Pro Quo for DC mobility
  28. It all adds up $ per partner / year 1. CFPA $250 2. Tax Prep $150 3. Debt $150 4. Mobility $500 Total $950Sales Tax est $22,000 per partner
  29. Another way to look at standards & oversight Public Company Private Company Int’l CompanyFinancial SEC FASB IASBReporting FASB PCFRC IFRS & SMEAudit /Attest AICPAPerformanceStandards PCAOB ASB, ARSC, PRB IAASBCode of AICPA AICPAConduct PEEC PEEC IFACCPA State Oversight & Enforcement of CPA LicenseLicensure
  30. The PlayersSEC FAF BRP FASB GASB PCFRC & State Boards & State CPA Societies
  31. Additional Background Info15,000 issuers and 28.5 million private companiesbut GAAP driven by public company issuesSmall businesses employ more than half of allprivate sector workersPrivate companies and their financial statementusers have information needs that are differentthan public companies
  32. Similar Issue Outside the US Too
  33. Concerns About Private Company Financial Reporting Include:Too many GAAP-specific requirements not useful or relevant for private companiesGreater FASB emphasis on public companiesIncreased cost, complexity, time- consuming using full GAAPUse of OCBOA raises the issue of what’s “generally accepted”
  34. U.S. Answer: Blue Ribbon Panel on Private Company Financial ReportingAddress how accounting standards can best meetprivate company financial statement users’ needsDetermine future of GAAP standard-setting processfor private companiesSponsored by AICPA, FAF and NASBA18 panel members: cross-section of financialreporting constituencies, including lenders, investors,owners, preparers and auditors
  35. Blue Ribbon Panel’s ConclusionsA problem exists that needs resolutionRecommendation #1 - Enhance GAAP for private companies by making significant modifications, where warrantedRecommendation #2 - FAF should create a separate private entities accounting standards board
  36. Other Key BRP RecommendationsFramework for differential decision criteria3-5 year sunset review to determineeffectiveness of new board5-7 board members$4-5 million annual budget
  37. FAF “Working Group”FAF created a “Working Group” on March 4, 2011Comprised of FAF Trustees and FAF StaffAdded non-profits to the mix
  38. 90.87% of MACPA members believe we need Private Company StandardsInsights form the Spring & Fall, 2010 PIU / town hall meetings covering 2,000+ members
  39. Judy O’Dell chair of FASB PCFRC shared her perspective
  40. MACPA’s responseMACPA sent comment letter to FAF on December, 2010 for initial surveyMACPA Chair Kimberly Ellison-Taylor appoints special Accounting Standards Task ForceAccounting Standards Task Force held meetings from Jan – Mar, 2011
  41. MACPA Accounting Standards Task Force – The power of “We”Chair:Art Flach Grant Thornton Public accounting firmMACPA Facilitators:Tom Hood MACPA CEO & Executive Director Non-ProfitJackie Brown MACPA COO Non-ProfitSkip Falatko MACPA CFO Non-ProfitTask Force Members:Ernie Paszkiewicz Gross Mendelsohn & Assoc. Public accounting firmRob Tuggle BB&T BankingBill Ziegler BB&T BankingCarl Kampel Ellin & Tucker Public accounting firmJoselin Martin Hayles & Howe Private companyLiz Gantnier Stegman & Co. Public accounting firmBob Tarola Right Advisory Public company consultantMike Manspeaker Smith Elliott Kearns & Company, LLC Public accounting firmKen Kelly McCormick Public companyDon McConnell KCI Private companyJim Canalichio Dixon Valve Company Private companyJim Jenkins Stout Causey & Horning Public accounting firmAl DeLeon DeLeon & Stang Public accounting firmDebra Busk DeLeon & Stang Public accounting firmCharles Postal Santos, Postal & Co. Public accounting firmJim McKinney University of Maryland EducatorOJ Phillips Small Business Administration Government
  42. Our guiding principles
  43. Draft conclusions – Not approved by MACPA BoardPrivate Company Standards need to be addressed (costs, complexity, OCBOA)Current structure is not working – PCFRC recommendations were not addressed, prior studies indicate issueOther jurisdictions around the world recognizes needs of private company users are different
  44. Next StepsFinalizing whitepaperApproval and position by MACPA BoardDistribution and communication
  45. Maryland ranks in top five states with  highest audit deficiencies with DOL EBP Audits (401k) & 403(b) Audit Quality must be raised in Maryland MACPA worked with the DOL to put on our first Employee Benefit Plan Conference in May, 2010 Look for the second annual conference in May, 2011
  46. Can green give you a competitive  advantage? 70% of consumers are looking for businesses adopting sustainable business practices
  48. Workforce & Demographics
  49. 5 Generations in the workforce Live First, Work Second Digital Natives
  50. Workforce & DemographicsThese guys are retiring These are the new workers These are making the purchasing decisions Facebook Email Generation Generation
  51. Are you ready for Gen Y?
  52. The Gen-Y guy
  53. Gen Y’s Top Five Ways We Think and Act at Work 1. No expectation of lifetime employment 2. A feeling of entitlement with big expectations 3. A hunger for instant gratification and tangible outcomes 4. A new relationship with technology & communication 5. A need for ongoing feedback
  54. In defense of Gen Y “The only way we can go wrong is to discourage these kids. They are set to go. They’re smart. They’re motivated. They understand the problems. They are engaged.” - David Gergen – Political Analyst
  55. New CPAs in Maryland New CPAs 457 383 291 236 194 1667404 05 06 07 08 09 10
  56. Technology• Cloud• Mobile• Location‐based /  Augmented Reality• Security / Privacy• Social Media• XBRL
  57. Social MediaAccording to CFO magazine
  58. The learning continues by using social media  tools to connect the learners
  59. Surfing Lessons! www.cpalegislativeinsidercom
  60. Comments on BizLearningBlog include a participant and author of book Jane Bozarth ‐ author
  61. XBRL – Time to pay attention
  62. XBRL & SBR
  63. Turbulent times require new skills and new ways of thinking“You can’t stop the waves, but you can learn to surf” - Jon Kabat-Zinn Photo: Pratt’s surfing page
  64. RFTF – Reports from the Future
  65. MACPA’s Board focuses on 2025
  66. Top 10 Trends  (and the time to address is now)1. Pressures on Gov’t & rising deficit2. Changes in learning – informal & on‐demand3. The cloud = flex, global, work anywhere4. Increasing complexity, ambiguity & change5. Globalization and economic shifts6. Information overload7. Shift to consumer power (push to pull)8. Workforce, demographics, the “she” economy9. Going mobile10. Social media = business
  67. Steve King – Emergent Research & author of Intuit 2020 report
  68. GT: The Evolving Accounting Talent Profile1. Developing soft skills 2. Understanding and applying international accounting 3. Understanding complex accounting and auditing  standards4. Adapting to an evolving regulatory framework5. Addressing new external reporting needs6. Understanding ERP or IT systems and technological7. Employing quantitative risk management techniques8. Possessing specialized industry knowledge and  understanding companys non‐financial business drivers
  69. What’s over the horizon for CPAs?
  70. In 1997, the CPA profession crowd‐sourced its future with  over 3,500 CPAs in the CPA Vision Project Our core purpose, our reason for  being is CPAs... Making sense of  a changing and  complex world. Here is what they said…
  71. Our Vision Statement for the future is: ( mandates to ourselves for a successful future)CPAs are the trusted professionals who enablepeople and organizations to shape their future.Combining insight with integrity, CPAs deliver value by:  • Communicating the total  picture with clarity and  objectivity, • Translating complex  information into critical  knowledge, • Anticipating and creating  opportunities, and • Designing pathways that  transform vision into reality.
  72. The DNA of the CPA • Communication &  Leadership • Strategic & Critical Thinking • Focus on the Customer,  Client, and Market • Interpretation of  Converging Information • Technologically adept
  73. IBM Global CFO Study shows movement to “Value Integrators”
  74. The Decade of the CFO? The best CEOs in the  world are a  combination of CEO,  COO and CFO. They are  inspirational,  financially literate and  know the ins and outs  of their business at a  sophisticated level.
  76. Why we are here and what we are doing about it C P A
  77. Tools: MACPA Fed & State Tax listservs
  78. The Power of We!Our colleagues are phenomenal.  I see it time and time again, both on this website and elsewhere.  Not only "resources" but the human creativity, insight and wisdom so freely given. It reminds me of a karate dojo where members at various levels tutor and mentor those "below" them while being tutored and mentored "from above." Makes me proud to be part of the profession. Im glad so many recognize how unique and very valuable we as a group are, its truly remarkable and oh so greatly appreciated. Since I appear to be the sole member practicing at the beach, I would like to suggest maybe a little social mixer for listserv participants before, during, or after the MACPA Beach Retreat? Nothing too formal or structured, but so we all can put faces with names, etc. I see these "flash mobs" on the news, lol, something like that. I will be some sort of forward team arranging a place and maybe a drink or food deal with an OC establishment. I feel that I have come to know many of you but couldnt pick you out of a police line up! Its not just the sole practitioner. There are many of us out here with small practices that dont have the manpower resources to maintain in‐house specialized departments.  I find it amazing that even at the height of deadlines there are those who "belly up to the bar," to offer words of wisdom and advice for the practitioner in need. Awesome folks here! .  I am, too, a sole practitioner, and this year I used listserv for the first time.  Every time I have some problems I couldnt figure out and always had to spend more time than "necessary" to look for publications, look for research materials, etc.  But this year, any problem or issue I post there, to my surprising happiness, the answer came in within a couple of hours, without spending my own time. I just waited for any answer to come out from you.  And especially this year, which I found out I was having more complicated cases than before, how much I was able to deal with, thanks to all of your suggestions, advices, ideas, all of which truly helped me survive this tough season. And yes, finally, I really think our membership dues become worth when we utilize this groups brainstorming. Thank you all for your invaluable advice and comments, suggestions you have given to me, who has been suffering lack of great resources. I could give you unlimited thank‐yous to you all! I agree the listserv is an invaluable resource and it has helped me a great deal during this tax season. Of all the wonderful benefits of being a MACPA member, the value of this one service covers the cost of my membership dues times ten. .  With the wealth of experience available here, I can get information that would be difficult to come by anywhere else.  I echo the sentiments of some of those before me, I wish I could give as much to the website as I get from it.  Thanks to all for your invaluable advice and comments during the past tax season!! Thanks you for the superb quality of this site. I do so few returns, but get (and don’t contribute) so much from it! What a great resource for the sole practitioner!!  Thank You for the invaluable support to those in the collective we call the ListServe :) Two things I so much enjoy from this group is 1) always being able to learn something new, and 2) the reminders that the wackiness I encounter in my clients isnt unique to me, and 3) if I wasnt so sleepy Id remember number 3 …. Lol You all are the best!!  I too would like to add my thanks to all the wonderful participants in this list serve. While I am semi‐retired, the information provided is invaluable to assist in the preparation of the remaining clients whom I still service. Best wishes to all for a restful post tax season. Enjoy, before you tackle the extensions.  My thanks to everyone that assisted in any and all ways this season. My last return before the clock strikes midnight was just transmitted, so I am off. In the immortal of words of the beloved Truman character, “Good morning, good evening, and good night.” I agree with all. The listserve is a tremendous resource to all. I have learned so much. Almost makes you want to form a new acctg firm ‐‐ MACPA & CO! As one of the many lurkers who receives e‐mails and posts questions very infrequently, I speak only for myself when I say thank you to all who share their knowledge here. For those who run small shops, this is a valuable resource for information. My heartfelt thanks for your generosity. Amen to that…I add my thanks!!! Now…off to a week of NOT coming to the office, answering phones, answering emails, etc….  Many thanks to all those who asked and those who answered. I would like to thank everyone who offered words of wisdom on the list serve. Its amazing how much insight you gain from the collective wisdom of the group. I really appreciate the time and effort that everyone put forth, especially the 10 or 15 ‘heavy lifters’ who seem to respond to any question quickly. Thanks everybody for the additional support and welcomed contributions!  Amen. I only wish I could add as much as I get. At the risk of being redundant…I add my thanks for the many timely and helpful replies. It is precisely because I value the input from so many folks brighter and more knowledgeable than I, that I try to take time out and answer on the odd occasion I have something to add. I would argue that, for those of us without a large firm “ivory tower” to turn to, this has become one of the greatest tools/benefits offered by MACPA. THANK YOU ALL AGAIN!! I must get on the band wagon also and thank everyonewho utilized the listserve. It has been invaluable. Questions asked reminded me that I may have the same problem and the answers given have been helpful and informative. You all are such a wonderful help! THANK YOU!  Another thank you for the listserv especially to: Those of you who are so very generous with your time and expertise. Those of you whose questions make my clients seem not so bad. Those of you who have taught me that the IRS instructions are really very useful and to just try looking it up. Those of you who made me laugh. Certainly this is the best CPE there is, even if we do not get credit for it.  Ditto.  I couldnt have said it better myself.  I hope everyone gets some time to rest and relax! Thanks to all, enjoy the off season.  I couldn’t agree more. Thanks particularly to the “heavy lifters” who seem to respond to almost every question with insights, cites and great advice.  I must also add my thanks to all who participated on the listserve. Many times answers to questions were provided even before I had time to ask them.  
  79. MACPA Leadership AcademySeptember  18‐20, 2011 Annapolis
  80. Key events & datesGov’t / NFP Conf ‐ Apr 29, 2011      ‐ U of MDEmployee Benefit Conf ‐ May 10, 2011     ‐ ColumbiaMACPA Business & Industry Conference  ‐ May 20, 2011    – Turf ValleyMACPA Summit  ‐ Jun 2 & 3, 2011  ‐ BWIBeach Retreat ‐ Jul 5 – 7, 2011     ‐ OCCPA Day in Annapolis ‐ Jan 18, 2012        ‐ Annapolis
  81. Executive Level LearningMACPA’s affiliate, the Business Learning Institute(BLI) delivers competency-based curriculum formanagers and executives:  Strategic Management  Business Management  Performance Measurement Management  Leadership Development  Communications Skills
  82. Resources Products  / Services Business Solutions• RJP Insurance• AON• Purchasing Power  of the profession – Savings of up to  70% off!
  83. New CPAs Swearing‐in Ceremony and  MACPA Member Reception June 2, 2011 BWI Hilton
  84. How Leadership is changing? From To• Information Stocks • Information Flows• Hierarchy • Network• Centralized • Distributed• Teacher • Facilitator• Push • Pull
  85. How to survive the Extreme Future? • A future vision – a clear vision of  where you are going • A sound strategy to get you there • Tools to help persuade key people • Effective executionSource: Dr. James Canton, Ph.d – author of the Extreme Future
  86. “It is hard to plan for the long term future when you don’tknow what is going to happen five minutes from now.Today, a competitive edge is thin and temporary; the edgequickly becomes the margin. The ability to define the edge,and the ultimate competitive advantage, is found in thesmarts, heart and ingenuity of your people - thats yourpowerhouse. Tap that, train it, focus it and mobilize it; nowyouve engaged a network and inspired a sustainable shift.Insight to action, one without the other is either useless ordestructive.” -Tom Hood & Gretchen Pisano co-authors of the i2a: Insights to Action Strategic Thinking System
  87. The leaders job is to…Provide hopeand inspiration!
  88. Tom Hood, CPA.CITP CEO Maryland Association of CPAs Business Learning Institute (443) 632‐2301 E‐mail Web http://www.macpa.orgBlog