Keeping Up With Accounting Salisbury
University BAP & IMA March 9, 2010 Tom Hood, CPA.CITP Hood CPA CITP CEO & Executive Director Business Learning Institute Maryland Association of CPAs

What is a Profession? status,
Professions enjoy a high social status regard and esteem conferred upon them by society. This high esteem arises primarily from the higher social function of their work, which is regarded as vital to society as a whole g y and thus of having a special and valuable nature. All professions i f i involve t h i l l technical, specialized and highly skilled work. Training for this work involves g obtaining degrees and professional qualifications without which entry to the Certified profession is barred Training also barred. Public requires regular updating of skills. Accountant Source: Wikipedia

Three Attributes of a Profession
1.A body of knowledge y g 2.A code of conduct 3 A public interest 3.A “CPAs ARE the CPAs DISCIPLINE in business!” Jim Collins

License > Certification Certified &
Licensed by Certified by an the government go ernment organization organi ation • CPA • CFP • Doctors • CFE • Lawyers L • CIA • Teachers • CITP • Regulated by federal & state law • BVLS • PFS • These are credentials not Responsible to society governed by state law

CPAs swear oath to “protect
the public interest” interest Maryland DLLR Swearing-in of new CPAs y g June 28, 2010 At the MACPA Member Summit

How to become a CPA?
The Four E’s - Maryland Example 1. 1 Education – Bachelor’s degree + 30 hours Bachelor s 2. Examination – Pass the Uniform CPA Exam 3. Ethics – Maryland requires a separate ethics exam 4. Experience – 1 year of experience working with a CPA Thereafter, they are required to complete 80 hours of continuing education every two years, including four hours of ethics training. Most states abide by some version of these criteria which are covered in a concept of “substantial equivalency in the Uniform Accountancy Act by the AICPA- NASBA

The “New” CPA exam Four
Parts 1. Auditing & Attestation 2. Business Environment Concepts 3. 3 Financial A Fi i l Accounting & R ti Reporting - h d t ti hardest 4. Regulation

3rd Annual Investor Education Survey Level of Investor Confidence in U.S. Capital Markets 60 50 40
30 20 10 0 Great deal G td l Quite a bit Q it bit Some S Very little V littl None N 2008 2009

Attitudes toward CPA Credential Attitudes toward CPA Credential
76% % 74% 66% 60% 43% Investors 31% BDMs More confident in a job Accountants certified by non‐ CPA requires more done by a CPA than if it U.S. organizations, such as the rigorous training and Association of Chartered were done by an testing than any other Certified Accountants (ACCA), accountant not a CPA. accountant not a CPA financial credential. fi i l d i l are just as qualified as CPAs. 9

Top 5 Attributes of CPAs
from the public (investors & BDMs) • Has integrity • Competent • Objective • Able to synthesize information • Focused on client needs 10

Benefits of being a CPA
professional • S i to others Service h and the community • Doing work that matters • Being on the cutting edge of society • Being in on what’s happening • Belonging to a g g community of professionals

Our members are feeling a
tsunami of changes Q: What is the # 1 Issue facing all CPAs? A: Keeping up with changing standards & regulations 12

The Perfect Storm of Trends
& Forces • Economy • Standards, Legislation Regulation S d d L i l i &R l i • Globalization • Workplace & generations • Technology 13

What are MACPA members saying?
What phrases, images, topics stuck out p , g , p for you? • Generations • IFRS • XBRL • Social Networking • Transparency T • Change!

Top 10 Issues Facing CPAs 1. Economic Outlook 2. Tax 3. Business Operations 3
Business Operations 4. Implementation and Execution of Plans 5. New Business Development 6. Personal/Professional Development 7. Management and Leadership 8. Financial Regulatory Reform 9. Access to Financing and Credit 9 Access to Financing and Credit 10 New Accounting Standards, IFRS Source: CPA Trendlines for AICPA Feb, 2010

The economy is uncertain Which
ill be? Whi h will it b ? • Pending home sales index rose 6.4% in August to the highest level since March 2007 (National Association of Realtors) l l i M h 2007 (N ti lA i ti f R lt ) • Spending by U.S. consumers climbed in August by the most since 2001 (Commerce Dept.) ( p ) • Unemployment rate climbs to 9.8% (Labor Dept.) Double Slow Growth Slow Growth Rebound Dip

A useful framework to understand
the CPA profession What does the CPA profession support? What is under the CPA Profession?

Federal Laws & Regulations –
SEC, DOL, Treasury, GAO, PCAOB CPA Profession Standards – AICPA & FASB, GASB FASAB, IASB, IFAC FASB GASB, FASAB IASB State CPA Statutes police power of the states to protect their citizens vs commerce clause

Another View Public Company Private
Company Int’l Company Financial SEC FASB IASB Reporting FASB PCFRC IFRS & SME Attest AICPA Performance Standards PCAOB ASB IAASB Code of AICPA AICPA Conduct PEEC PEEC IFAC CPA Licensure State Oversight & Enforcement of CPA License

US Treasury MD Comptroller MD
Comptroller MD Comptroller CAQ Courtesy of the Maryland Association of CPAs – 2008 edition Drawing by Carol Kirwan, CPA

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 C Changes • Fraud & Forensic SAS 99 • FASB – IASB Convergence Project

“the basic physical and organizational
structures needed for the operation of a t t d d f th ti f society or enterprise” The infrastructure for the free market was found to be in disrepair in this latest market crisis and the CPA profession is a critical component

What happens when the infrastructure
breaks? • Fair Market Value (Acctg Standards) • Futures & Derivatives • Investment Advisors & Broker-Dealers When is the last time these guys had accounting as the major topic of their agenda?

Where do major changes come
from? Us – MACPA & AICPA Them OR

“No man’s life, liberty, or
happiness are safe when the legislature is in session” session – Mark Twain IRS 7216, FTC Red Flags, Sales Tax on Services, Tax Preparer regulations, Wall Street Reform Act Sarbanes Oxley Act Act, Sarbanes-Oxley Act…

An example of “they” -
The Consumer Financial Protection Act 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 c s s a c a crisis 5. Raise international regulatory standards & improve p international cooperation http://www.financialstability.gov/docs/regs/FinalReport_web.pdf

An example of “us” -
The 120/150 Hour CPA Exam Bill (HB 1137) H E 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)

Globalization

IFRS – International Financial Reporting
Standards "Accounting standard setters should take action to make significant p g g progress towards a single set of high g g quality global accounting standards by the end of 2009.“ – from G-20 Report The Washington Action Plan

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

GAAP, IFRS & Private Company
standards 2,500 pages 25,000 pages

Workforce /Generations

Pipeline - Good News p
20% avg increase in Graduates & enrollments!

Staff Shortage + Four Generations
in workplace = Trouble! 90,000,000 80,000,000 Staff 70,000,000 Shortage 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 0 Matures Boomers X'ers Millenials

Four Generations in the Workplace
Issue: Generational Differences • Matures 65 - 100 • Boomers 46 - 64 • Gen X 30 - 45 • Millennials 11 - 29 Which one are you?

Another way of looking at
this… Self Actualization Esteem Needs Esteem Belonging Needs Safety Needs Love & Belonging Physiological Needs Safety & Physiological Maslow’s hierarchy of needs

Here comes the Net Generation
"There is plenty of cause for alarm and/or optimism There when it comes to my generation; even I can see that. Still I think the negative views of us come from a fear of the unknown, a fear of change. Our world is evolving at a rapid rate, and that can be scary for older generations ld ti — Savannah Jones, 17, Portland, Oregon NGenophobia—the irrational and morbid fear of youth, especially with regards to their use of the Internet

Generation Gap? Or Generation Lap?
Generations One third (35%) of American adult internet users have a profile on an online social network site, four times as many as three years ago, but still much l ill h lower than the 6 % of h h 65% f online American teens who use social networks “In 1997, young people for the first time were recognized by adults as being authorities on something t l revolutionary – digital th iti thi truly l ti technology interactive technology, media, and collaboration.” – Don Tapscott “Growing Up Digital”

Technology
gy

• Information Security • Training
& Competency Management • Identity & Access • Privacy Management Management • Secure Data File Storage, • Improved Application & Transmission and Integration g Exchange • Document, Forms, Content • Business Process & Knowledge Management Improvement / Work Flow • El t i D t R t ti Electronic Data Retention • Mobile & Remote Strategy p Computing g

The SEC Mandate

Technology & Web 2.0 By
2010 Millenials/Gen Y-ers will outnumber 2010, Y ers Baby Boomers.

The New Math Social Networking (Old) +
Social Media (New) = A change in the way we build A change in the way we build relationships Source: Matt Goddard, CEO R2integrated

Old School vs. New School Chamber of Commerce Class Reunions Friends and Family E‐mail
Industry Meetings I d t M ti Newsletters

It s all about your Whuffie It’s all about
your Whuffie Whuffie is the culmination of your reputation, influence, bridging and bonding capital, i fl b id i d b di i l current and potential access to ideas, talent and resources, saved‐up favors, and d d f d accomplishments. ‐ Tara Hunt “The Whuffie Factor”

It’s about the Network Effect How big is your network? “In a sentence {to recognize a network} means ‘To discover how A, who is in touch with C,
Is affected by the relation between B and C.” – Russ Eckel “Becoming the Eye of the Tiger”

Whuffie Example

Get found Digital Footprints Get found –
Digital Footprints

Use the tools and don’t let the tools use you! • Social media requires loosening the reins on
loosening the reins on technology platforms and access • S i l Social media management di requires constant care and feeding, as well as monitoring i i • Because social media is MASS media mistakes media, mistakes and missteps are amplified amplified

nGenophobia is out there… nGenophobia is out there…
Social Notworking is a managerial problem, not a technology problem. If a salesman spends his day making personal phone calls rather than phoning potential customers, the solution is not to take away the phone. The solution is to make clear what is and is not acceptable i di t t bl behavior and… Discussion at AICPA Leadership Academy Discussion at AICPA Leadership Academy Chicago, July, 2009

Next steps… 1. Educate yourself – www.cpalearning2.com 2.
Create your digital footprint. Create y g p profiles on Facebook, LinkedIn and Google. 3. Start listening. Use Google Reader or Bloglines to begin reading thought to begin reading thought leaders in your profession or areas of interest. 4. Continue listening. Create your Twitter listening. Create your Twitter account and follow your profession and areas of interest. 5. Start sharing. Create a blog and record your thoughts. h h 6. Share. Recognize and promote the people you find interesting.

What is different about where
we are now? “As it relates to science and technology, the rate of change in the next decade, is likely to be 4 to7 times decade 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 ” 1670. -Expert on Education Panel, The Aspen Institute, 2007

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 53 get lost in the conversation and prematurely locked into a solution. to

Five Qualities of Extraordinary Leaders
1. Sight - Ability to see emerging patterns and shift perspective when necessary LC 2. 3. 3 Insight - Ability to learn faster than the rate of change in your industry Create - Ability to think C t strategically and critically to gain insights that create new opportunities 4. Communicate - Ability to collaborate inside and outside you organization and o build your o ga a o a d to bu d and sustain social networks of people engaged in the work 5. Inspire – Ability to mobilize p support and engage others to join you in ACTION

What is above knows what
is below, but what is below does not know what is above. One climbs, one sees. One descends one sees no longer but sees descends, longer, one has seen. There is an art of conducting oneself in the lower regions by the memory of what one saw higher up. When one can no longer see, one can at least still know. -Rene' Daumal “The faster you go, the further ahead you have to see.”

So what does the future
look like for CPAs?

The Year of the CFO
As financial skills are valued more highly, CFOs will make it to the corner office in greater numbers than before. Recession, credit crunch and the increasingly complex nature of global companies will all play directly into the bean counter’s hands. counter s hands Source: The Economist Magazine The World in 2009 Nov, 2008

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) ti l) 4. Communication skills 5. Global perspective Top 5 skills of the p p post-recession leader – CLO Magazine

In 1997, the CPA profession
crowd-sourced its future with over 3,500 CPAs in the CPA Vision Project P j t Our core purpose, our reason p p , for being is CPAs... CPAs Making sense of a changing and complex Here is what they said… world. world

Our Vision Statement for the
future is: ( mandates to ourselves for a successful future) CPAs are the trusted professionals who enable people and organizations to shape their future. C bi i i i ht with i t Combining insight ith integrity, CPA d li it CPAs deliver value b l by: • Communicating the total picture with clarity and objectivity, • Translating complex g p information into critical knowledge, • Anticipating and creating opportunities, and • Designing pathways that transform vision into reality. t f i i i t lit

This means we want to
move up the business value chain & add value by: Business Infor- Knowl- Infor Knowl Deci- Deci Data events mation edge sions Communicating with clarity and objectivity Translating information into knowledge Anticipating and creating opportunities Designing pathways to transform vision to reality

Using these competencies needed for
a changing & complex world p 2008 – Deloitte Research 1998 – CPA Vision Project • Change Management (C) • Communication & • Strategic Ability St t i Abilit (S) Leadership • Critical Thinking (S) • Strategic & Critical Thinking • Business Perspective (C) • Focus on the Customer, Client, and Market • Organizational Agility (C) • Interpretation of Converging • Dealing with Ambiguity g g y Information (S) • Technologically adept C – Catalyst S - Strategist

Standing on these core values

S what d So h
t does thi mean t you? this to ?

How to avoid the “lost
generation” syndrome 66

Are you an untouchable? A
Washington l W hi t lawyer f i d recently friend tl 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. j But those who have the ability to imagine new services, new opportunities and new ways to recruit work were being retained. retained They are the new untouchables.

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. happen This is our leader, our marketer, our linchpin!

Six Career Lessons from Johnny
Bunko 1. There is no plan 2. 2 Think strengths, not strengths weaknesses 3. It s 3 It’s not about you 4. Persistence trumps talent 5. 5 Make excellent mistakes 6. Leave an imprint

Who is in charge of
your career? 1. 1 Know thyself – what are your strengths? Passion? Your hedgehog? 2. Own your attitude & 2 O ttit d behavior 3. L>C Learn faster than your profession / industry 4. Use your sight and insights g 5. Relationships are the new “hard” skill 6. Communication, 6 Communication communication, communication 7. 7 Use the tools don’t let tools, the tools use you

Tom Hood, CPA.CITP CEO Maryland Association of CPAs Business Learning Institute (443) 632‐2301
E mail tom@macpa org E‐mail tom@macpa.org Web http://www.macpa.org Blog http://www.cpasuccess.com

MACPA resources • CPA Success, our daily blog www.CPASuccess.com •
CPA Spotlight, our weekly podcast www.macpa.org/podcast • Other MACPA blogs: • www CPALegislativeInsider com www.CPALegislativeInsider.com • www.NewCPAs.com • CPA Learning 2, a Web 2.0 playground by CPAs for CPAs www.CPALearning2.com 72

Professional Issues Update Spring, 2010 Spring, 2010 Tom Hood, CPA.CITP
CEO & Executive Director Maryland Association of CPAs http://www.MACPA.org tom@macpa.org t @ • Follow me on:  Twitter: http://www.Twitter.com/tomhood  LinkedIn: http://www.linkedin.com/in/tomhood  Facebook: http://www facebook com/thoodcpa 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