Briefing of the major issues facing the CPA Profession. It looks at the macro trends and the specifics inside the CPA Profession.
This update includes the latest on the economy, standards & legislation / regulation, workforce, technology, globalization, and the latest research about issues facing CPA firms, Business & Industry CPAs, and young professionals.
Falcon Invoice Discounting: Empowering Your Business Growth
MACPA Professional Issue Update - Leadership Academy
1. MACPA’s Professional
Issues Update
Leadership Academy
Presented
by:
Tom
Hood,
CPA.CITP
CEO
&
execu;ve
Director
2. Our
agenda
• What
do
we
see?
– Economy
– Legisla;ve,
Regula;ons
&
Standards
– Globaliza;on
– Technology
– Workforce
&
demographics
– CPA
Profession
Trends
• What
is
MACPA
doing
about
it?
3. Re-‐Set,
Re-‐Think,
Re-‐Imagine
An;cipa;on
of
a
very
large
business
model
change
amidst
rapid
change
–
Steve
King
There are two recessions – the
obvious one and the not so
obvious, the end of the industrial
age where perfecting the model
was the key. The new model will be
completely different. – Seth Godin
Grrrank…
The
economy
is
in
a
big
downshiS,
we
are
going
through
Schumpeter’s
wave
of
crea;ve
destruc;on.
4. The
next
thing…
Thirty
(30)
years
of
Prosperity?
"Economic
historians
assure
us
that
new
technology
will
eventually
enable
millions
of
ordinary
employees
to
add
more
value
in
the
workplace,
increasing
general
prosperity,"
Snyder
says.
Historically,
he
says,
such
periods
of
economic
prosperity
have
lasted
as
long
as
30
years.
–
Interview
with
Bill
Sheridan
–
MACPA
Chief
Editor
5. We
can
choose
to
harness
the
winds
of
change
The tornado of changes from CPA Vision Project circa 2000
8. What CPAs have said abut the future:
1. Aging population, loss of wisdom, knowledge transfer
2. Global rules & standards –IFRS – complexity
3. Information overload, complexity (Need for critical thinking & filter)
4. Information Security, Privacy & Data Protection
5. Global Competition, Rise of the Rest
6. Work-Life Balance
7. Diversity – Cultural Fusion – Beiging of America
8. Changing Communication (decline of face-to-face)
9. Increased Globalization
10. US Deficit
11. Education
14. Massive
legisla;on
in
a
very
short
;me
Patient Protection Act Dodd-Frank Wall Street Small Business Tax Relief
Reform & Consumer Act
Financial Protection Act
15. Recent
example
–
The
Dodd
–
Frank
Wall
Street
Reform
and
Consumer
Financial
Protec;on
Act
of
2010
Crisis hits news
HR 4173
Bureau of Consumer
Financial Protection
848 pages!
533 regulations
60 studies
94 reports
16. What did we do when you were forced
to have a license in every state you file
A
taxes in? WA
MT
ND ME
VT
K
OR MN NH
ID
SD WI
WY NY *MA
• Collaborative effort with AICPA – CPA/ NE IA
MI
*PA CT RI
SEA – NASBA & State CPA Societies
NV OH
UT IL IN DE NJ
CA CO WV
VA
HI • 47 states passed legislation in three KS MO KY
NC
MD
(3) years TN DC
AZ OK
NM AR SC
• Maryland enacted it in 2008 MS AL *GA
TX LA
FL
Awaiting Governor Signature - 1
PR
CPA Mobility Legislation Pending - 2
GU
CPA Mobility Enacted 46 U.S. VIRGIN ISLANDS
* CPA Mobility Enacted Only for
Other Mobility States – GA, PA, MA
In Process
17. It’s
7:00
am
at
a
town
hall
mee;ng
in
Aberdeen
when
the
AICPA
alert
comes
in…
18. More
than
100
MACPA
members
call
our
senators
and
we
defeat
the
amendment!
19. 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
20. Professional
Standards
are
also
rapidly
changing
• SAS 70 TO SOC
Reports
• FASB / IASB
Convergence
• COSO Integrated
Framework (2012)
• ASB Clarity Project
(late 2011)
• Ethics Codification
(late 2012)
21. Another way to look at standards & oversight
Public Company Private Company Int’l Company
Financial SEC
FASB
IASB
Reporting
FASB
PCFRC
IFRS
&
SME
Audit /Attest
AICPA
Performance
Standards
PCAOB
ASB,
ARSC,
PRB
IAASB
Code of AICPA
AICPA
Conduct
PEEC
PEEC
IFAC
CPA
State Oversight & Enforcement of CPA License
Licensure
22. Six
Ways
Convergence
is
happening
1. FASB
–
IASB
Convergence
Project
2. SEC
IFRS
–
The
Long
and
winding
roadmap
3. Private
Company
Standards
4. AICPA
Audi;ng
Standards
Board
ASB
Clarity
project
5. AICPA
Professional
Ethics
Execu;ve
Commieee
–
convergence
6. Green
/
Sustainability
repor;ng
23. The
;me
is
now!
Private
Company
Standards
• MACPA
Task
Force
releases
whitepaper
and
concludes:
– Private
Company
Standards
need
to
be
addressed
(costs,
complexity,
OCBOA)
– Current
structure
is
not
working
–
PCFRC
recommenda;ons
were
not
addressed,
prior
studies
indicate
issue
– Other
jurisdic;ons
around
the
world
recognize
needs
of
private
company
users
are
different
• MACPA
Sent
comment
leeer
to
FAF
–
we
are
#
1425
(up
to
2,554
leeers)
• Featured
in
CFO
magazine
&
Accoun;ng
Today
24. The
Federal
Issues
• Sarbanes-‐Oxley
Act
of
2002
• FTC
Red
Flags
rule
–
privacy
&
iden;ty
theS
• Tax
Preparer
Registra;on
&
PTIN
issue
• Pa;ent
Protec;on
Act
&
1099’s
• Sub
S.
Employment
Tax
Issue
• H.R.5297
-‐
Small
Business
Jobs
and
Credit
Act
of
2010
–
1099s
• Tax
Patents
• Next
jobs
bill?
25. Protec;ng
by
advoca;ng
for
members
(CPAs)
=
real
results!
Working together with the AICPA and many State CPA Societies achieved these:
ü Retained
independent
structure
of
financial
accoun;ng
standards
(FASB)
ü Modified
provision
to
audit
broker-‐dealers
(PCAOB)
ü Exempted
CPAs
from
CFPA
registra;on
due
to
exis;ng
licensing
and
oversight
ü Stopped
excessive
liability
exposure
for
auditors
(aiding
&
abeong)
ü Commented
on
SOX
404(b)
exemp;ons
30. 1. Extended tax deadline by
one week – federal &
state
2. Ban on Tax Strategy
Patents
3. Clarification on using
Social Security Numbers
in Maryland (AG opinion)
4. Advocating Private
Company Standards
5. Testified against sales
taxes on accounting
services in summer
hearings
6. Maryland license now
good in 48 states (NY
passes mobility)
31. Looking
ahead
to
2012
• Special
Session
to
deal
with
redistric;ng
(and
budget)
–
will
see
tax
proposals
• Maryland
Social
Security
Privacy
Act
–
AG
Opinion
• Sales
Tax
on
Services
• Combined
Repor;ng
• Compara;ve
Fault
=
increase
liability
• Quid
Pro
Quo
for
DC
mobility
32. CPE
• CPE
=
CPE
• Self-‐study
allowed
hour
for
hour
&
unlimited
• 4
hour
Ethics
Requirement
every
two
years
• Peer
Review
qualifies
for
CPE
• CPE
Audits
– Sa;sfactory
Compliance
– Adjusted
Compliance
– Audit
Failure
33. An
example
-‐
CPE
Regula;ons
involved
all
levels
–
law,
regula;ons,
and
procedures
Maryland Senate & Maryland Governor
A Bill SB 128 Law
From State Board House passes bill signs into law
Maryland State Board of
Public Accountancy
Clarify thru regulations
And enforce the law
34. New
CPAs
take
oath
to
Protect
the
Public
Interest
MACPA CPA Summit scheduled for June 11th & 12th, 2012
36. 5
Forces
of
Globaliza;on
1. Growth
of
consumers
in
emerging
economies
2. Technologies
that
empower
consumers
&
communi;es
3. Increase
in
labor
produc;vity
in
developed
markets
4. ShiS
of
economic
ac;vity
between
and
within
regions
5. Increasingly
global
markets
for
labor
&
talent
The counter trend is Localization or think globally, act locally
39. Technology
• Cloud
• Mobile
• Loca;on-‐based
/
Augmented
Reality
• Security
/
Privacy
• Social
Media
• XBRL
40. AICPA
Top
10
Technology
Issues
1.
Control
and
Use
of
Mobile
Devices
2.
Informa;on
Security
3.
Data
Reten;on
Policies
and
Structure
4.
Remote
Access
5.
Staff
and
Management
Training
6.
Process
Documenta;on
and
improvements
7.
Saving
and
Making
Money
w/Technology
8.
Technology
Cost
Controls
9.
Budget
Processes
10.
Project
Management
&
deployment
of
new
apps
45. XBRL
&
MACPA
&
You
• SEC
Mandate
–
June
15,
2011
-‐
third
wave
• Radical
Transparency
(DATA
Act
of
2011)
• Libera;on
of
data
for
financial
analysis
• Reduced
compliance
burden
(SBR)
49. What
today’s
workers
want
• Engage your top performers
• Coach tomorrow’s leaders
• Manage your Millennials
Think AMP
• Autonomy
• Mastery
• Purpose
50. The
CPA
Profession
Flat is the new growth
3% average growth
Some declines
Competition is increasing
51. Accoun;ng
Firms
Most
Trusted
Advisors
• Generally
speaking,
how
believable
do
you
normally
find
statements
made
by
someone
who
works
for
one
of
these
organiza;ons
or
groups
• “Echo
Boomers”
(18-‐34)
rated
accoun;ng
firms
highest–
74%
67%
62%
Acctg
Firms
55%
51%
49%
Banks
47%
Investment
Firms
Health
Ins.
Co.
36%
Mortgage
Companies
Gov't
regulators
Credit
Card
Co.
Source: Harris Poll, May 18
55. Top
10
Issues
Facing
BizInd
1. Communica;ng
effec;vely
(new
tools
vs
face
to
face)
2. Talent
–
Training
–
Succession
Planning
3. Economic
environment
4. Genera;onal
–
Work/Life
balance
5. Supply
chain
–
rising
costs
6. Strategic
planning
in
uncertainty
7. Financial
literacy
about
business
8. Increasing
government
regula;ons
9. IT
security
/
privacy
10. Mul;-‐tasking
and
increasing
workload
56. What CPAs have said abut the future:
1. Aging population, loss of wisdom, knowledge transfer
2. Global rules & standards –IFRS – complexity
3. Information overload, complexity (Need for critical thinking & filter)
4. Information Security, Privacy & Data Protection
5. Global Competition, Rise of the Rest
6. Work-Life Balance
7. Diversity – Cultural Fusion – Beiging of America
8. Changing Communication (decline of face-to-face)
9. Increased Globalization
10. US Deficit
11. Education
57. What
do
young
professionals
need
to
be
leaders?
1. “SoS
skills”
broader
and
more
diverse
knowledge
in
leadership,
management,
change
&
business
development
2. Ability
to
tap
into
networks
(AICPA,
others)
to
con;nuously
learn
(including
social
media)
3. Learn
and
teach
collabora;on,
&
leadership
4. How
to
embrace
change
and
be
flexible
&
adaptable
5. Learn
how
to
lead
teams
6. Bridge
the
gap
between
“older
leaders”
and
“younger
leaders
7. Learn
about
themselves
(Strengths-‐based
leadership)
so
they
can
be
more
purposeful,
proac;ve
&
mo;vated
63. Tom
Hood,
CPA.CITP
CEO
Maryland
Associa8on
of
CPAs
Business
Learning
Ins8tute
(443)
632-‐2301
E-‐mail
tom@macpa.org
Web
hNp://www.macpa.org
Blog
hNp://www.cpasuccess.com
hNp://www,bizlearningblog.com