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Welcome to the Spring 2010
Professional Issues Update An Exclusive Benefit For MACPA Members “A pioneer in using social media and Web 2.0 technologies in accounting, Hood (and his team at MACPA) has tapped his expertise to roll out one of the most extensive sets of resources in the country for helping CPAs handle the recession.” - Bill Carlino, Editor Accounting Today Magazine 1
CPA Professional 2.0 1. Learning
& staying on the cutting edge 2. Managing my career 3. Doing my work 4. Interacting with peers 5. Becoming a leader in my field Allen Blue – CEO of Linked In
Are you an untouchable? A
Washington lawyer friend recently told me about layoffs at his firm. I asked him who was getting axed. He said it was interesting: lawyers who were used to just showing up and having work handed to them were the first to go because with the bursting of the credit bubble, that flow of work just isn’t there. But those who have the ability to imagine new services, new opportunities and new ways to recruit work were being retained. They are the new untouchables.
You will learn to become
a navigator of change using BLI's I2A - Insight to Action strategic thinking system Sight Insight Create Communicate Inspire!
Five Qualities of Extraordinary Leaders
1. Sight - Ability to see emerging patterns and shift perspective when necessary 2. Insight - Ability to learn faster than the rate of change in your industry 3. Create - Ability to think strategically and critically to gain insights that create new opportunities 4. Communicate - Ability to collaborate inside and outside your organization and to build and sustain social networks of people engaged in the work 5. Inspire – Ability to mobilize support and engage others to join you in ACTION
It’s not what you look
at that matters, it is what you see – Henry David Thoreau “The faster you go, the further ahead you have to see.”
The economy is still uncertain?
Economists offer a wide range of predictions... Source: Banham, R. (2010 Mar 1). The shape of things to come. CFO Magazine.
The fact of the matter
is, this is not a normal downturn, this is a …fundamental re-SET! - Steve Ballmer – CEO Microsoft
The Pace of Change is
Accelerating Faster “As it relates to science and technology, the rate of change in the next decade, is likely to be 4 to7 times faster than in the last decade. If it is 4x faster it would be like planning for 2010 in 1890, if it is 7x faster it would be like planning for 2010 in 1670.” -Expert on Education Panel, The Aspen Institute, 2007
Despite a turbulent economy, learn
how to make your business thrive MACPA’s Business & Industry Conference May 14 Turf Valley, Ellicott City Topics: • Annual Update • National & Local Professional Issues Update • Enterprise Risk Management • The Virtual Workplace • Strategic Planning • Professional/Career Development • Political & Social Changes in the Business Environment • Economic Update
2010 Event Schedule www.macpa.org/events
April 30 GNFP Conference May 14 Business and Industry June 7 Employee Benefit Plan Audit June 28-29 New! Maryland CPA Summit June 30- July 3 Annual Beach Retreat Sept 21 Government Contractors Sept 13 & 14 Technology/AccountingWeb Sept 27-28 Chesapeake Tax Oct 4 International Conference Oct 26 Practitioners’ Nov 1-5 Advanced Tax Institute Jan 2011 Educator’s Conference
Protect “No man’s life, liberty,
or happiness are safe when the legislature is in session” – Mark Twain IRS 7216, FTC Red Flags, Sales Tax on Services, Tax Preparer regulations, Wall Street Reform Act, Sarbanes-Oxley Act…
An example of “us” -
The 120/150 Hour CPA Exam Bill (HB 1137) Changes the requirements to sit for the CPA exam to allow you to sit for the Exam upon completion of 120 hours (and the requirements of section 1 & 3) and get licensed upon completion of the final 30 credit hours (and the requirements in group 2)
Latest proposals -Wall Street Reform
& Consumer Protection Act - HR 4173 1. Promote robust supervision and regulation of financial firms 2. Establish comprehensive regulation of financial markets 3. Protect consumers and investors form financial abuse 4. Provide the government with the tools it needs to manage financial crisis 5. Raise international regulatory standards & improve international cooperation http://www.financialstability.gov/docs/regs/FinalReport_web.pdf
Wall Street Reform & Consumer
Protection Act • HR 4173 o Passed House floor vote (223‐202) o Combines CFPA Act & Investor Protection Act • Provisions o PCAOB authority to scope the regulation of audits for all broker‐dealers through rulemaking o Exempts non‐accelerated filers from SOX Section 404(b) • Progress o Recognizes CPAs’ valuable advice and counsel o Excludes sales of securities or extension of credit
Senate Version Introduced • Dodd introduced Senate bill March 15
• Passed Senate committee March 22 • Establishes Financial Stability Oversight Council • Grants greater powers to Federal Reserve o Break up large entities that pose a “grave threat” o Examine bank‐holding companies >$50 billion in assets o Create Consumer Financial Protection Agency within Fed • Includes version of Volcker Rule • Proposes transaction fee to establish fund for future financial collapse
“Red Flags” Rule Fair and Accurate •
Requires written plan for identity verification for Credit anyone who is a “creditor” • Defines “creditor” too broadly Transaction Act • AICPA , state societies wrote letters urging delay of rules (enforcement delayed twice) Implementation • Nov. 1 implementation date delayed to June 1, 2010 • AICPA released guidance for CPAs on Oct. 16 • AICPA continues to seek exemption for CPAs Advocacy • ABA and subsequent AICPA lawsuits filed
Tax Preparer Registration Congress’ Concerns •
High error rate associated with Earned Income Tax Credit • Consumer protection IRS Proposal • Registration of all paid tax return preparers; fee • Preparer Tax Identification Number; subject to Circular 230 • Non‐affiliated tax preparers must: • Pass “competency” exam • Complete 15 hours education annually
Tax Preparer Penalty - 7216
• Temporary Regulations (12/29/09) o Can filter newsletters to specific clients o Can generally disclose scope of practice to potential clients o Can disclose specific taxpayer information if required for qualify, peer or conflict reviews • Rev Rul 2010‐4 (12/30/09) o No advance approval necessary to: • Contact client regarding change in tax law or regulations • To use unrelated third party to create, publish and distribute newsletters • Rev Rul 2010‐5 o Generally permits disclosure of specific taxpayer information as necessary to the preparer’s professional liability insurance carrier
Estate Tax • House action o
Proposed permanent extension of $3.5 million exemption, 45% rate o Republicans wanted $5 million exclusion and 35% rate, or, as an alternative, either total repeal or reducing the rate to that of long term capital gains • Meantime, total repeal o Total repeal as of 1/1/10 but carryover basis • Note – 1/1/10 not total carryover basis – get to step up 1.3 million of assets (as selected by executor) and another 3 million if there is a surviving spouse • AICPA position o Consistency important o Index exemption to inflation o Conform exemptions for estate, gift, generation skipping and special use valuation o Portability of exemption between spouse so, if first to die, does not use full exemption; residual amount automatically carries over to the surviving spouse
Health Care and Taxes •
Patient Protection and Affordable Care Act signed into law March 23 • Health Care and Education Reconciliation Act of 2010 signed into law March 30 • Numerous tax provisions within for individuals and employers, including: o Premium Assistance Credit o Small Business Tax Credit o Excise Tax on Uninsured Individuals o Medical Care Itemized Deduction Threshold o Additional Hospital Insurance Tax on High‐Income Taxpayers o Excise Tax on High Cost Employer‐Sponsored Coverage o Tax on HSA Distributions o Expansion of Adoption Credit, Adoption Assistance Programs o Information Reporting o Adult Dependent o Medicare Tax on Investment Income
Looking to the Future •
2011 top rates go up ‐ 36% and 39.6% • Proposals not getting traction o Increase capital gains rate to 20% o Limit itemized deduction to 28% rate • Proposals getting traction o Taxing carried interest as ordinary income o Codification of economic substance doctrine o Impose limits on family limited partnership valuations o LIFO repeal o AMT “patch “ will happen
Standards Changes • AS 5
- PCAOB • IFRS – SEC International gets legs (again) • Fair Value Accounting • XBRL – SEC mandatory • Codification Project – FASB • Clarity Project – ASB – Convergence with international • Reliability Project (comps & reviews) • DOL 403 (b) Plans • Internal Control – COSO • Fin 48 effective 2009 • Form 990 Changes • Fraud & Forensic SAS 99 • FASB – IASB Convergence Project
Compilation and Review Standards •
SSARS No. 19 issued on December 30, 2009 • Represents the most significant changes to the compilation and review literature since 1978 • How SSARS 19 differs from the April 2009 exposure draft o SSARS 19 retains the concept of limited assurance rather than moderate assurance o Non‐independent review not part of SSARS 19 53
Clarity Project • Convergence of auditing standards •
ASB redrafting all of the auditing sections in Codification of Statements on Auditing Standards o Apply the clarity drafting conventions and converge the material with the ISAs • Effective date is expected to apply to audits of financial statements for periods beginning no earlier than December 15, 2010
Ethics and Independence Codification •
Professional Ethics Executive Committee creating a single source of easy‐to‐use guidance on AICPA ethics and independence matters • Restructure AICPA Code of Professional Conduct and combine with related guidance • Benefits o Topically organized; simpler, easier and more intuitive to use o Improved research capability o Reduced time and effort in identifying differences with IFAC Code • Scheduled for 3 years ( through 2011)
SEC Roadmap released Early adopters
Large can file using Accelerated IFRS Filers Small-caps 2010 2014 2016 2011 2015 Official SEC Accelerated decision filers – point second wave
Blue Ribbon Panel: Members •
Rick Anderson, Moss Adams, LLP • Terri Polley, FAF (Chairman of BRP) • Steve Feilmeier, Koch Industries • William Knese, Angus Industries • Krista McMasters, Gunderson • Michael Menzies, Easton Bank and • Dev Strischek, SunTrust Banks, Inc. Trust Company • Hubert Glover, REDE, Inc. • Billy Atkinson, NASBA • Barry Melancon, AICPA • Kewsong Lee, Warburg Pincus • Mark Vonnahme, Surety, Arch • David Morgan, Lattimore, Black, Insurance Group Morgan and Cain PC • David Hirschmann, U.S. Chamber of • Daryl Buck, Reasor’s Holding Commerce Company, Inc. • Jason Mendelson, Foundry Group • Paul Limbert, WesBanco, Inc. • Teri Yohn, Indiana Univ.
5 Forces of Globalization 1.
Growth of consumers in emerging economies 2. Technologies that empower consumers & communities 3. Increase in labor productivity in developed markets 4. Shift of economic activity between and within regions 5. Increasingly global markets for labor & talent
Generation Gap? Or Generation Lap?
Generations “In 1997, young people for the first time were recognized by adults as being authorities on something truly revolutionary – digital technology, interactive media, and collaboration.” – Don Tapscott “Growing Up Digital” NGenophobia—the irrational and morbid fear of youth, especially with regards to their use of the Internet
What are baby boomers most
“clueless about”? • Mom does not know how to work the TV • Computers- do not let Dad touch it • Technology in general • Certain forms of technology • Digital camera operation • Boomers think work is everything
Gen X – Stuck beneath
the boomer ceiling 10 ways to breakthrough 1. Play to your strengths 2. Build your brand 3. Collaborate – create the context for your success 4. Raid the candy store – learning & development 5. Change the rules 6. Influence the organization 7. Influence the Boomers 8. Take initiative 9. Honor your commitments 10. Build & leverage your network
Here are five major benefits that The Economist report says that social media has created: 1. Trusted online
venues where real people can meet up using their real identities. 2. New ways for firms and organizations to reach their customers and those who influence them. 3. Reduced friction in labor markets by allowing employers and prospective employees to find each other and connect. 4. Faster information flow and communication inside companies and organizations. 5. A "free and immensely powerful set of communication and collaboration tools to everyone on Earth who has access to a broadband internet connection."
Top Ten Issues for MFG 1. Regulatory/Legislative (56) 2. Private Company Leadership (47)
3. Capital Markets Awareness / Recognition (34) 4. Rethinking Business Model (25) 5. Protect Audit/CPA Franchise (20) 6. Risk Management (Audit efficiencies) (20) 7. Leadership Development / Succession Planning (19) 8. Global / International (Clients / IFRS / Branding) (17) 9. Leveraging Technology & Social Media (17) 10. MFG Issues specific forums / focus groups (8) 89
CPA re:Vision –the wisdom of
the crowd Our core purpose, our reason for being is CPAs... Making sense of a changing and complex Here is what they said… world.
Top 5 Competencies needed to
ride the waves of change • Communication & Leadership • Strategic & Critical Thinking • Focus on the Customer, Client, and Market • Interpretation of Converging Information • Technologically adept
Top 5 Attributes of CPAs
• Has integrity • Competent • Objective • Able to synthesize information • Focused on client needs 99
Bottom Five Attributes of CPAs
• Creative & innovative • Demonstrates leadership • Able to see the big picture • Communicates effectively • Technologically adept
CLO Magazine Stephen Miles, vice
chairman of Heidrick & Struggles, an executive recruitment firm, said this: "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."
Accounting is the quickest path
to the corner office 1. Broader and longer line of sight (future focus) 2. Network leadership 3. Strong analysis skills (financial and operational) 4. Communication skills 5. Global perspective Top 5 skills of the post-recession leader – CLO Magazine
Top 10 Opportunities for CPAs
1. Valuation 6. Green / sustainability 2. Forensics and fraud 7. XBRL 3. Governmental – 8. Tax planning State/local/NFP 9. Enterprise Risk 4. International Management (IFRS and tax) 10. Renewable energy 5. Health care
How to increase your odds
of roaring out of the recession from HBR 1. Focus on operational efficiency (smart spending and targeted headcount reduction for efficiency versus across- the-board headcount reductions). 2. Investment in developing new markets (leveraging your product / service mix into expanded markets -- geographic, new segments or niches). 3. Investments in enlarging the asset base. (In professional services, that is training and development and strategic staffing for new opportunities.) I call this placing careful bets on the future. http://www.cpasuccess.com/2010/03/how-to-beat-the-odds-and-roar-out-of-the-recession.html
Are you indispensable? Imagine an
organization with an employee who can accurately see the truth, understand the situation, and understand the potential outcomes of various decisions. And now imagine that this person is also able to make something happen. This is our leader, our marketer, our linchpin!
The meta map of the
I2A™Strategic Thinking System provides an architecture or framework to structure thinking and conversation as you engage. When talking about complex issues that aren’t completely understood, or debating solutions where there are multiple points of view, it is easy 107get lost in the conversation and prematurely locked into a solution. to
Professional Issues Update Spring, 2010 Tom Hood, CPA.CITP CEO & Executive Director
Maryland Association of CPAs http://www.MACPA.org firstname.lastname@example.org • Follow me on: Twitter: http://www.Twitter.com/tomhood LinkedIn: http://www.linkedin.com/in/tomhood Facebook: http://www.facebook.com/thoodcpa Plaxo: http://tomhood.myplaxo.com Slideshare: http://www.slideshare.net/thoodcpa Youtube: http://www.youtube.com/thoodcpa Second Life avatar name: Rocky Maddaloni