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PIU Managing Partners Update Fall, 2009

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Professional Issues Update for Maryland Managing Partners of CPA Firms - given on October 22nd (in-person) & November 5th (conference call).

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PIU Managing Partners Update Fall, 2009

  1. Welcome to the Fall 2009 <br />Managing Partner Update<br />“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.”<br /> - Bill Carlino, Editor Accounting Today Magazine<br />1<br />
  2. Keeping Up With AccountingProfessional Issues Update2009 Fall Edition<br />Tom Hood, CPA.CITP<br />CEO & Executive Director<br />Business Learning Institute<br />Maryland Association of CPAs<br />
  3. Q: What is the # 1 Issue facing all CPAs?<br />A: Keeping up with changing standards & regulations<br /> “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 2006 in 1890, if it is 7x faster it would be like planning for 2006 in 1670.”<br /> -Expert on Education Panel, The Aspen Institute, 2007<br />
  4. 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 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.<br /> -Rene&apos; Daumal<br />“The faster you go, the further ahead you have to see.”<br />
  5. Insights & Opportunities<br />“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.”<br /> - Peter Drucker, <br /> Managing in Turbulent Times<br />
  6. Action<br />“The best way to predict the future is to create it.”<br /> - Peter Drucker, <br /> Managing in Turbulent Times<br />
  7. What are MACPA members saying?<br />What should be MACPA’s #1 priority?<br /><ul><li>Advocacy with regulators & legislators
  8. Protecting our CPA license
  9. Insuring integrity of the CPA profession
  10. Continuing Professional Education </li></ul>Insights form the Spring, 2009 PIU / town hall meetings covering 1,500+ members<br />
  11. From the Spring PIUs<br />What phrases, images or words caught your attention?<br />Generations<br />IFRS<br />XBRL<br />Social Networking <br />Transparency <br />Change!<br />
  12. What will the new normal look like?<br />“It is increasingly clear that the current downturn is fundamentally different from recessions of recent decades. We are experiencing not merely another turn of the business cycle, but a restructuring of the economic order.” <br /> – Ian Davis, McKinsey <br /> Quarterly March, 2009<br />
  13. Today’s Agenda<br />Scenarios that could happen - Federal & state legislation affecting CPA firms<br />Federal & State Current Issues<br />What we are doing about it<br />MACPA 2010 Legislative Agenda (CPA day – January 20, 2010)<br />Top Five Issues Facing Firms<br />Top Five Opportunities for Firms<br />Top Seven Keys to Success in CPA Firm Management<br />Background resources and things to know<br />
  14. Scenarios<br />$3,500 penalty per customer fine for failing to have identity theft policies (FTC Red Flag ruling)<br />Mandatory registration of CPAs and staff who do tax & financial planning by CFPA of 2009<br />All CPAs and staff required to take another tax exam, register with State Board ($250+ each), and comply with additional CPE (special interests-Maryland Society of Accountants, Jack Surgent)<br />Blur by Licensed Tax Preparers?<br />Sales Tax on Accounting & Tax Services - Tax, Accounting & Consulting are luxury tax items and should be taxed – what will it cost to administer this?<br />
  15. Regulations & Standards<br />
  16. Where do major changes come from?<br />Us – MACPA & AICPA<br />Them - lawmakers<br />OR<br />State<br />Federal<br />
  17. Infrastructure<br />“the basic physical and organizational structures needed for the operation of a society or enterprise”<br />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<br />
  18. Three Drivers<br />Fair Market Value (Acctg Standards)<br />Futures & Derivatives<br />Investment Advisors & Broker-Dealers<br />When is the last time these guys had accounting as the major topic of their agenda?<br />
  19. Latest proposal<br />Promote robust supervision and regulation of financial firms<br />Establish comprehensive regulation of financial markets<br />Protect consumers and investors form financial abuse<br />Provide the government with the tools it needs to manage financial crisis<br />Raise international regulatory standards & improve international cooperation<br /><br />
  20. The Real Costs of Changing FMV?<br />“Confidence, trust, and numbers that investors can believe in are the stuff that make or break the capital markets. When investors question the validity of numbers, they sell and wait, rather than buy and invest. <br />Yet those charged with building confidence and trust and presenting numbers that can be believed are under sustained attack -- and they are losing.”<br />- Arthur Levitt, Weakening a Market Watchdog in Washington Post – March 26, 20009<br />
  21. First PCAOB now FAOB?Financial Accounting Oversight Bill<br />New 5 member oversight board proposed by Congress – March 6th, 2009<br />
  22. What is under the CPA Profession?<br />Question: When do you think about infrastructure?<br />Answer: when it breaks!<br />
  23. police power of the states to protect their citizens vs commerce clause<br />
  24. Another View<br />Public Company<br />Private Company<br />Int’l Company<br />Financial<br />Reporting<br />Attest Performance<br />Standards<br />Code of Conduct<br />State Oversight & Enforcement of CPA License<br />CPA<br />Licensure<br />
  25. US Treasury<br />MD Comptroller<br />MD Comptroller<br />MD Comptroller<br />CAQ<br />Courtesy of the Maryland Association of CPAs – 2008 edition Drawing by Carol Kirwan, CPA<br />
  26. Standards Changes<br />AS 5 - PCAOB<br />IFRS – SEC International gets legs (again)<br />Fair Value Accounting<br />XBRL – SEC mandatory<br />Codification Project – FASB<br />Clarity Project – ASB<br />Convergence with international<br />Reliability Project (comps & reviews)<br />DOL 403 (b) Plans<br />Internal Control – COSO<br />Fin 48 effective 2009<br />Form 990 Changes<br />Fraud & Forensic SAS 99<br />
  27. Where do major changes come from?<br />Us – MACPA & AICPA<br />Them<br />OR<br />
  28. “No man’s life, liberty, or happiness are safe when the legislature is in session” <br /> – Mark Twain<br />IRS Section 7216 <br />Circular 230/Section 6694 <br />Proposed regulation/registration of tax return preparers <br />Proposed Consumer Financial Protection Agency legislation<br />FTC red flags<br />
  29. How we spent our summer vacation<br />Testifying at Maryland Business Tax Reform Commission Hearings<br />Advocating changes to MD Franchise Law<br />Attending IRS Tax Preparers hearings<br />Advocating for IRS, FTC red flags, and Consumer Financial Protection Act<br /><br />
  30. MACPA’s 2010 Agenda<br />Stop sales Tax on Accounting & Tax services<br />Oppose combined reporting<br />Stop efforts to liberalize tort laws (lawsuit abuse)<br />Support State Board 120/150 legislation<br />Stop efforts to repeal Peer Review<br />CPA Day in Annapolis<br />January 20, 2010<br />Visit<br />
  31. Maryland & Federal Tax Preparer LawThreats to your CPA License<br />Well intentioned consumer group<br />Solving a problem – low income tax frauds<br />But…creating problems for CPAS<br />Licensed / Certified Tax Preparers would be confusing to the public<br />Tax Preparer Exam using ACAT / H&R Block designation (ATA, ATP) opens door for second tier license<br />Misinformation / confusion<br />
  32. Blur<br />Questions we are asking:<br />Then why did they oppose the “experience requirement”, mobility? Why did they support tax preparers act (with negative provisions against CPAs)?<br />
  33. What we did about it…Maryland Individual Tax Preparers Act<br />Requires registration and examination of all tax preparers<br />Registered Tax Preparers (cannot use terms licensed or certified)<br />CPAs and staff are exempt (along with other Circ 230 Practitioners)<br />Out-of-state CPAs exempt<br />Independent Regulatory Exam required<br />Safe Harbor disclosure required<br />“I am not a CPA”<br />MACPA seat on State Board<br />
  34. Sales Tax on Accounting & Tax<br />
  35. Sales Tax on Services<br />Should accounting services be taxed?<br />We’ve fought and won on this numerous times ---- but times are changing<br />19 states are considering taxing services<br />Could be an issue in 2012-2013 budget <br />Loss of the one-time bailout funding leaves an $8 Billion hole to fill<br />QUESTION: Should this continue to be a bedrock issue for MACPA?<br />32<br />
  36. 120 – 150 Hour Proposal<br /><ul><li> 120 hours to sit for CPA Exam
  37. 150 hours required for licensure
  38. Five – Six years to complete
  39. CPE required to stay current</li></li></ul><li>CPA Mobility Legislative Activity 2009<br />45 States in 2 years!<br />WA<br />VT<br />ME<br />MT<br />ND<br />MN<br />OR<br />NH<br />ID<br />WI<br />SD<br />MA<br />NY<br />WY<br />MI<br />RI<br />CT<br />IA<br />PA<br />NE<br />NV<br />NJ<br />UT<br />OH<br />DE<br /> IN<br />IL<br />WV<br />CO<br />CA<br />VA<br />MD<br />KS<br />MO<br />KY<br />DC<br />NC<br />AZ<br />TN<br />OK<br />AR<br />SC<br />NM<br />MS<br />AL<br />GA<br />AK<br />TX<br />LA<br />PR<br />HI<br />FL<br />GU<br />V<br />2009 -2010 Anticipated Legislative<br />Activity<br />Mobility Enacted - 45<br />Legislation Introduced - 1<br />No Formal Activity<br />Mobility Enacted Only for Other<br />Mobility States -2 (GA PA)<br />AICPA March 2009<br />
  40. Recent Leg / Reg Changes you need to know!<br /><ul><li>New Mobility Law
  41. Maryland Individual Tax Preparer Act
  42. New Corporate Reporting Requirements
  43. Peer Review Requirement – October 1st
  44. New CPA Exam Requirements
  45. New CPE regulations
  46. Mandatory e-file
  47. New Non-Profit Audit Requirements > $500,000
  48. MD Independent Contractor Legislation</li></ul>CPA Day in Annapolis<br />January 20, 2010<br />
  49. New CPE Regulations<br />New approved fields of study<br />CPE = CPE<br />Changes in rules for accounting educators<br />Effective May 18, 2009<br />
  50. PCPS/TSCPA MAP Survey 2009Top Five Issues Facing Firms<br />Client Retention<br />Marketing / Practice Growth<br />Tax Law Changes & Complexity<br />Keeping up with Regulations & Standards<br />Retaining Qualified Staff / Work/Life Balance<br />For larger firms add Partner Accountability & Succession Planning<br />Mark Koziel, CPA<br />AICPA PCPS <br /><br />
  51. Top 5 Opportunities<br />Social media for marketing, training, and client connections<br />Staff Opportunities in downturn – create performance culture<br />Partner Accountability – Link to firm strategic plan<br />Invest carefully in markets and marketing<br />Use training strategically – linked to firm strategy<br />
  52. 7 Keys to Success in CPA Firm Management<br />Leadership<br />Technology<br />Learning Organization<br />Marketing & Business Development<br />A great Place to Work<br />Client Service & Satisfaction<br />Strategy Execution<br />39<br />Source: Rick Telberg – Bay Street Group<br />
  53. Other Mega Trends<br />Globalization & IFRS<br />Workforce / Pipeline<br />Technology & Social Media<br />Image of CPA<br />Keeping Up With Change<br />
  54. IFRS – International Financial Reporting Standards<br />&quot;Accounting standard setters should take action to make significant progress towards a single set of high quality global accounting standards by the end of 2009.“ – from G-20 Report The Washington Action Plan<br />Converge or Adopt<br />
  55. Workforce / Pipeline<br />
  56. Pipeline - Good News<br />20% avg increase in <br />Graduates & enrollments!<br />
  57. 291<br />236<br />194<br />166<br />74<br />
  58. Maryland Pipeline<br />Primary School Student<br />College <br />Student<br />CPA Exam<br />Candidate<br />CPA<br />MACPA<br />CPA<br />NYPN<br />Engaged<br />Retiree<br />MACPA CPA<br />Career Paths<br />1,818<br />399<br />8,047<br />1,373<br /><ul><li>Drive to CPA Exam
  59. Reach employment influencers
  60. Career changers</li></li></ul><li>Here comes the Net Generation<br /> &quot;There is plenty of cause for alarm and/or optimism 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<br />— Savannah Jones, 17, Portland, Oregon<br />NGenophobia—the irrational and morbid fear of youth, especially with regards to their use of the Internet<br />
  61. Four Generations in the Workplace<br />Issue: Generational Differences<br />Matures 64 - 100<br />Boomers 45 - 63<br />Gen X 29 - 44<br />Millennials 10 - 28<br />Which one are you?<br />
  62. Generations<br />Generation Gap? Or Generation Lap?<br />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 lower than the 65% of online American teens who use social networks <br />“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.” <br /> – Don Tapscott “Growing Up Digital”<br />
  63. Eight Net Gen Norms<br />Freedom – The freedom to work when and where you want<br />Customization – My job my life<br />Scrutiny – I know what you did last night<br />Integrity – Be a good company to work for<br />Collaboration – Teamwork<br />Entertainment – Work should be fun<br />Speed – Let’s make things happen now!<br />Innovation – Let me invent<br />
  64. Technology<br />
  65. Information Security Management<br />Privacy Management<br />Secure Data File Storage, Transmission and Exchange<br />Business Process Improvement / Work Flow<br />Mobile & Remote Computing<br />Training & Competency<br />Identity & Access Management<br />Improved Application & Integration<br />Document, Forms, Content & Knowledge Management<br />Electronic Data Retention Strategy<br />
  66. Technology & Web 2.0<br />By 2010, Millenials/Gen Y-erswill outnumber Baby Boomers. <br />
  67. This is a Social Network <br />
  68. The New Math<br />Social Networking (Old)<br />Social Media (New)<br />A change in the way we build relationships<br />+<br />=<br />Source: Matt Goddard, CEO R2integrated <br />
  69. It’s all about your Whuffie<br />Whuffie is the culmination of your reputation, influence, bridging and bonding capital, current and potential access to ideas, talent and resources, saved-up favors, and accomplishments.<br />- Tara Hunt “The Whuffie Factor”<br />
  70. It’s about the Network Effect<br />How big is your network?<br />“In a sentence {to recognize a network} means ‘To discover how A, who is in touch with C,<br />Is affected by the relation between B and C.” – Russ Eckel “Becoming the Eye of the Tiger”<br />
  71. Whuffie Example<br />8,181 Views<br />Auckland, NZ<br />15 mins<br />
  72. Get found – Digital Footprints<br />Blog<br />Linked in<br />Press from our blog<br />
  73. Our Journey…<br />Share<br />Listen & Learn<br />Communicate<br />Connect<br />Connect – Protect - Achieve<br />
  74. Benefits of Social Media<br />Share & discuss information<br />Increase ability to connect to more people<br />Increase ability to manage more relationships<br />Customer service & support<br />Tool for recruitment & retention<br />Information & knowledge management<br />Increased findability on web (SEO)<br />Brand management<br />Accelerate your strategy<br />Did I say it’s cheap?<br />
  75. Marketing Strategy 2.0<br />
  76. Andrew Rose – Naden / Lean<br />
  77. 97% More Links<br />434% More SEO<br />55% More Visitors<br />
  78. What is a blog?<br />A Web site of news and commentary that allows readers to give feedback about what they are reading.<br />
  79. What can a blog do for you?<br /><ul><li>Establish your company as a thought leader
  80. Reinvent your marketing strategy
  81. Build communities and improve customer relations
  82. Enhance legislative advocacy
  83. Expand your brand</li></li></ul><li>James Carroll, CPA<br />Website<br />Facebook<br />Twitter<br />
  84. Last two stories<br />Client contact via Facebook<br />Staff relations via Facebook<br />Leadership & Social Media <br />– panel of young professionals<br />AICPA Leadership Academy<br />Chicago, 2009<br />
  85. Challenges<br />Social media requires loosening the reins on technology platforms and access<br />Social media management requires constant care and feeding, as well as monitoring<br />Because social media is MASS media, mistakes and missteps are amplified <br />
  86. Social Notworking?<br /> This is defined as “The practice of spending time unproductively on social-networking websites, especially when one should be working,” or “When you spend all days at your job on social networking sites such as facebook,myspace and twitter.”<br />
  87. Research says…<br />&quot;One day at work they took away our tools, like Facebook, Pandora, Bebo, NPR. Work is slow now, cold and boring.&quot; —STEVE RESSLER, 27, TAMPA, FLORIDA<br />In a social environment based on networked individualism, the internet’s capacity to maintain and cultivate social networks has real payoffs (in the workplace).”– “The Strength of Internet Ties” Report<br />
  88. Sooooo….<br /> Social Notworking is a managerial problem, not a technology problem.<br /> 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 behavior and…<br />Discussion at AICPA Leadership Academy<br />Chicago, July, 2009<br />
  89. Risk Management<br />Educate & train your staff<br />Set security & usage policies<br />Restrict Access during certain <br /> times (if you have to)<br />Monitor – using search & <br /> google alerts<br />
  90. Educate yourself<br />Free self-directed learning for CPAs by CPAs<br /><br />
  91. Next steps…<br />Educate yourself –<br />Create your digital footprint. Create profiles on Facebook, LinkedIn and Google. <br />Start listening. Use Google Reader or Bloglines to begin reading thought leaders in your profession or areas of interest. <br />Continue listening. Create your Twitter account and follow your profession and areas of interest. <br />Start sharing. Create a blog and record your thoughts. <br />Share. Recognize and promote the people you find interesting. <br />
  92. You can…Ignore itFight it orHarness it’s power<br />
  93. Image of the CPA<br />
  94. Image is better than pre-Enron highs<br />The future success of the CPA profession relies a great deal upon public perception of CPAs&apos; abilities & roles<br /> - CPA Vision Project<br />
  95. Attitudes toward CPA Credential<br />More confident in a job done by a CPA than if it were done by an accountant not a CPA.<br />Accountants certified by non-U.S. organizations, such as the Association of Chartered Certified Accountants (ACCA), are just as qualified as CPAs.<br />CPA requires more rigorous training and testing than any other financial credential.<br />79<br />
  96. 80<br />CPA vs. Acct<br />Inv 39 to -5 <br />BDMs 46 to 15<br />
  97. Top 5 Attributes of CPAs<br />Has integrity<br />Competent<br />Objective<br />Able to synthesize information<br />Focused on client needs<br />81<br />The most trusted advisor<br />
  98. Bottom Five Attributes of CPAs<br /><ul><li>Creative & innovative
  99. Demonstrates leadership
  100. Able to see the big picture
  101. Communicates effectively
  102. Technologically adept</li></ul>But…lacking soft skills<br />
  103. Keeping Up With Change<br />
  104. Dealing with Change<br />Change is the law of life. Those who look only to the past or present are certain to miss the future.&quot; <br />- John F. Kennedy<br />
  105. Five Qualities of Extraordinary Leaders<br />Sight - Ability to see emerging patterns and shift perspective when necessary<br />Insight - Ability to learn faster than the rate of change in your industry<br />Create - Ability to think strategically and critically to gain insights that create new opportunities<br />Communicate - Ability to collaborate inside and outside your organization and to build and sustain social networks of people engaged in the work<br />Inspire – Ability to mobilize support and engage others to join you in ACTION<br />LC<br />
  106. CPA Competencies Needed<br />2008 – Deloitte Research<br />1998 – CPA Vision Project<br />Communication & Leadership<br />Strategic & Critical Thinking<br />Focus on the Customer, Client, and Market<br />Interpretation of Converging Information<br />Technologically adept<br />Change Management (C)<br />Strategic Ability (S)<br />Critical Thinking (S)<br />Business Perspective (C)<br />Organizational Agility (C)<br />Dealing with Ambiguity (S)<br />C – Catalyst<br />S - Strategist<br />
  107. Tom Hood, CPA.CITP<br />CEO<br />Maryland Association of CPAs<br />Business Learning Institute<br />(443) 632-2301<br />E-mail<br />Web<br />Blog<br />Connect – Protect - Achieve<br />
  108. Tools<br />I2A – Insights to Action – a strategic thinking system<br /><br />CPA Vision project<br /><br />Social media – How are CPAs using social media<br /><br />Social Media Quick Start Program<br /><br />XBRL <br /><br />Blog posts from CPA Success<br /><br /><br />Mindmanager CPA edition<br /><br />
  109. MACPA resources<br />CPA Success, our daily<br /> CPA Spotlight, our weekly<br /> Other MACPA blogs:<br /><ul><li>
  111.</li></ul> CPA Learning 2, a Web 2.0 playground by CPAs for<br />91<br />
  112. CPAs and Social Media – Passing Fador Valuable Tool?<br />Tom Hood, CPA.CITP<br />CEO & Executive Director<br />Maryland Association of CPAs<br /><br /><br />Follow me on:<br /><ul><li>Twitter:
  113. LinkedIn:
  114. Facebook:
  115. Plaxo:
  116. Slideshare:
  117. Youtube:
  118. Second Life avatar name: Rocky Maddaloni</li>